UTS Energy Inc (Toronto: UTS.TO), which specializes in developing oil sands properties, along with their partner Teck Cominco LTD (NYSE:TCK), announced Wednesday that they have plans to develop a new oil sand mine that will eventually produce on average about 160,000 barrels of "tar-like bitumen" a day.
The project will be on the Fort Hills oil sands, where projections are the "Frontier" mine should be producing bitumen by 2015. Bitumen is one form of crude that is extra-heavy, and has to be upgraded.
There's another mine they're also looking at developing near the Fort Hills oil sands, which while smaller, they project could an additional 50,000 barrels a day. That mine, dubbed Equinox, should be up and running by 2014.
All of this is made possible by the rising price of oil, which made past development of heavier crude cost prohibitive.
Most of the costs come from having to separate the bitumen from the sand and then upgrading it to synthetic crude ready for the refineries.
The two companies haven't decided yet whether they'll have the heavy crude upgraded at the Fort Hills project, or ship it as is to refineries.
They're also looking to possibly make a deal with American refineries, where they offer a share in their oil sand holdings for a stake in the refinery. Two other Canadian companies - EnCana Corp (Toronto: ECA.TO) and Husky Energy Inc (Toronto:HSE.TO) - have made deals like that with U.S. refineries.
Estimates are the northern Alberta oil sands area should end up producing about 3 million barrels a day by 2015.
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