Engineering & Mining Journal

JUL 2019

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Page 25 of 67

OIL SANDS 24 E&MJ • JULY 2019 tion targeted in late 2019. CNRL expects the program to deliver an extra 26,000 bbl/d in the first 12 months of production. "These pad additions are high-return activities as the company utilizes avail- able excess oil processing and steam ca- pacity at Primrose," the company stated in its report. Work at the new Kirby North SAGD operation continues to push ahead, and this has resulted in the project progress- ing two quarters ahead of schedule with overall cost performance remaining on budget. Commissioning of the central processing facility took place on May 1, and CNRL plans to progressively ramp up production toward Kirby North's overall capacity of 40,000 bbl/d, in late 2020. Construction originally began at Kirby North in 2014, but was halted less than a year later due to a drop in oil prices. Most of the major equipment had been purchased by that point and, after a bit of careful bud- geting, CNRL resumed work in late 2017 with well-pair drilling taking place through- out 2018. The company will no doubt be pleased to see the mine operational. Like Imperial, CNRL is also dedicating significant resources to environmental ini- tiatives. The company has invested more than $3.4 billion in R&D since 2009 and stated in its Q1 2019 report that by le- veraging technology, including carbon cap- ture, it has developed a pathway to reduce its greenhouse gas emissions intensity to below the average for global crude oils. As part of this, CNRL is currently run- ning an In-Pit Extraction Process (IPEP) pilot at its Horizon operation that will de- termine the feasibility of producing stack- able dry tailings. The initial testing phase has now concluded, and CNRL said that "results have been positive with excellent recovery rates and evidence of stackable tailings. The company continues to make enhancements and will operate and test the pilot through 2019." CNRL added that the project has the potential to reduce its carbon emissions and environmental footprint by reducing the usage of haul trucks, the size and need for tailings ponds and accelerating site reclamation. In addition, the process has the potential to significantly reduce capital and operating costs. Kenney Wages War Restricted market access was an issue that all the producers above mentioned in conjunction with their first-quarter 2019 results, either on paper or during investor/ analyst calls. The topic is unavoidable, as pipeline bottlenecks were a key cause of the Albertan production curtailment. Jason Kenney, who succeeded Notely to become Alberta's 18 th premier on April 30, has been very vocal in his support for better transportation infrastructure and he has, on a number of occasions, voiced concerns about the impact of this issue on the competitiveness of Canada's oil and gas producers. One of Kenney's first speeches was delivered to the Canadian government's Transportation and Communications Sen- ate Committee just hours after taking of- fice, in which he called for Bill C-48, which seeks to ban Canadian oil tankers off much of Canada's west coast, to be scrapped. "This bill has been referred to as an oil tanker ban on Canada's northern west coast. It's actually a ban against oil only from Alberta," he said. "For example, Can- ada cannot stop foreign oil tankers passing through the same waters in which Alberta oil is banned. Loaded foreign oil tankers will continue to travel the British Colum- bia coast between Alaska and Washington. The result is two sets of laws here — one for Alberta oil, another for foreign oil." His speech had the desired effect and the bill was voted down on May 16. The move was praised by many, including the CAPP, which estimates that lack of market access currently costs Canadian producers between C$10.8 billion and C$15.6 bil- lion annually. The CAPP represents around 80% of Canada's oil and natural gas pro- ducers and is widely considered the voice of Canada's upstream oil, oil sands and natural gas industry. "There is no rationale for the govern- ment to proceed with Bill C-48," com- mented Tim McMillan, CAPP's president and CEO. "It would permanently take away Canada's opportunity to move our energy products to growing international markets in Asia. Tankers have safely been travelling in waters off the west coast for decades." Between 2014 and 2017, the number of people employed in exploration and production, oil and natural gas, and oil sands construction fell by about 60,000 people across the country. The CAPP strongly believes that Bill C-48 puts addi - tional jobs, businesses, and communities at risk by putting a barrier in the way of healthy economies. No More Pipelines? Not content with waging war on just one front, Kenney also took the Senate Com- mittee on Energy, the Environment and Natural Resources, to task on May 2, over C-69 — the No More Pipelines bill. Pipeline bottlenecks and construc- tion delays are a long running theme in the oil sands. The price gap that resulted in this year's production curtailment has been widely attributed to the Canadian federal government's decades-long re- luctance to increase pipeline capacity, and this has left Alberta's energy pro- ducers with few options to move their products to market. A case in point is the Trans Mountain pipeline expansion project; this is essen- tially a twinning of the existing 1,150-km (715 mile) pipeline between Strathcona County near Edmonton in Alberta, and Burnaby in British Columbia. The proposed expansion will boost the capacity of the system from 300,000 bbl/d to 890,000 bbl/d and create hun- dreds of new jobs. However, despite re- ceiving the go ahead from the federal government in 2016, construction on the project was brought to a halt in mid-2018 pending a reconsideration report by the National Energy Board. The report, which recommended the project proceeds, was delivered to the federal government in February, Presi- dent Justin Trudeau once again approved the expansion on June 18. However, this is the third time the project has been ap- proved. It still requires a Certificate of Public Convenience and Necessity from the NEB and the pipeline must be built in accordance with 156 conditions stip- ulated also by the NEB. In short, if the pipeline is built, the path forward is un- likely to be smooth. Either way, investor confidence in the project has been severely shaken. And this is just one of a number of pipeline projects currently being held up for com- plex political reasons — Google Keystone XL if you have a few hours to spare. Kenney told the senate committee: "Already, Canada's resource sector is in- creasingly seen by investors as not worth the risk — and we've all been paying the price in billions of dollars in lost eco- nomic potential. We've seen that with Kinder Morgan walking away from the Trans Mountain pipeline and TransCana- da giving up on Energy East — both be-

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