Engineering & Mining Journal

JUL 2019

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JULY 2019 • E&MJ 21 drive "a significant improvement in safety performance and operating cost." One area in which Imperial did not hold back was investment for sustainabil- ity initiatives. The company donated C$1 million in the first quarter to help develop a two-year water management program at the Southern Alberta Institute of Tech- nology (SAIT); purportedly the first of its kind in Canada. The company has also been working on reducing its energy consumption and has invested C$2.1 billion over the past 20 years on R&D for new technologies. Between 2013 and 2017, Imperial man- aged to reduce the intensity of green- house gas emissions from its operated oil sands by 20%, and it plans to cut levels by a further 10% over the next five years. Imperial added that it is develop- ing new technologies that could reduce greenhouse gas emissions intensity for future in-situ oil sands production by ap- proximately 25% to 90%. Production Curtailed Another thorn currently in Imperial's side, and that of other oil sands producers, is the mandated production curtailment an- nounced in December 2018 by then Al - bertan Premier Rachel Notely. The temporary measure was put in place from January to counteract a historically high oil price differential that Scotiabank estimated was costing the national econo- my more than C$80 million per day, and it is expected to last until the end of 2019. In late 2018, Alberta was producing 190,000 bbl/d of raw crude and bitumen more than could be carried by pipelines and rail, which resulted in a significant sur- plus at storage facilities. In total, around 35 million barrels of oil were in storage (twice the normal amount), which meant that facilities were approaching capacity. Under the action, production of raw crude oil and bitumen was to be reduced by 8.7% or 325,000 bbl/d to reduce the glut, and production limits are gradually being lifted each month to around 95,000 bbl/d, which will be maintained until De- cember 31, when the rules will be lifted. Alberta's natural resources belong to Albertans, and in exchange for the right to develop these resources, companies pay the government a royalty. This is a percentage of revenues generated from the sale of oil and natural gas products or, in some cases, takes the product in- kind for the government to sell. In late 2018, the price differential for Western Canadian Select (WCS) versus West Texas Intermediate (WTI) was hov- ering around US$30 to US$50, peaking at US$52 in October. The curtailment is designed to reduce volatility, narrowing the price differential by at least US$4 per barrel relative to where it otherwise would have been, adding C$1.1 billion of gov- ernment revenue in 2019-2020 — mon- ey that Notely said will be used to pay for roads, schools and hospitals. "Every Albertan owns the energy re- sources in the ground, and we have a duty to defend those resources," she said in December. "But right now, they're being sold for pennies on the dollar. We must act immediately, and we must do it to- gether. I can't promise the coming weeks and months will be easy, but I can prom- ise we will never back down in our fight to protect jobs and the resources owned by all Albertans." Whether producers like prices being manipulated or not, the curtailment is working. By the end of the first quarter, WTI had averaged US$54.90 per barrel and WCS US$42.44 narrowing the differ- ential to around US$12. Imperial for one is not a fan. After increasing crude-by-rail shipments to record levels in late 2018, the company discontinued shipments in February be- The Fort Hills ore preparation plant accepts raw bitumen and prepares it for further processing. Shown here are the sizer conveyors and surge bin. (Photo: Suncor Energy Inc.) OIL SANDS OIL SANDS

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