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Oil sands projects slashed as credit crisis hits Alberta

Norval Scott, Globe and Mail
The full force of the global financial crisis has finally hit the oil sands, delaying two of Canada’s largest energy projects and tempering Alberta’s economic boom.

Suncor Energy Inc. said yesterday that it is slashing its expected spending in 2009 by one-third because of uncertainty over oil prices and credit availability.

Part of the reduction will affect the $20.6-billion Voyageur oil sands project the company is developing, meaning its upgrader will be delayed by one year.

Meanwhile, the consortium behind the $23.8-billion Fort Hills project, led by Petro-Canada, said it could also delay building its planned upgrader, instead constructing only its planned oil sands mine in order to get crude to market more quickly and cheaply.
(24 October 2008)

The Carbonate Question

Peter McKenzie-Brown, Oilsands Review via Language Matters
According to one view, planet Earth has two energy super-provinces – one in the Old World, the other in the New. The Old World super-province stretches from North Africa through the Middle East into Siberia. Rich with conventional oil, it’s the source of most of the petroleum traded on global markets.

The New World super-province reaches from northern Alaska and the Beaufort Sea through Alberta’s oil sands down to Venezuela’s Orinoco heavy oil belt, and continues south between the Atlantic coast and the eastern Andes. Richer in oil than its Old World sibling, its conventional resources are mostly in decline. However, this vast region has great volumes of untapped unconventional resources – notably Alberta’s oilsands, Venezuela’s Orinoco heavy oil belt and America’s oil shales.

This article focuses on the least known of those unconventional resources. Bitumen carbonates are common reservoir rocks totally saturated with very heavy oil. They are also the hydrocarbon resource in which Canada leads the world by an almost incomprehensible margin.

Canadian deposits contain 96% of the entire world’s supply of this black, barely mobile oil. That would be just a statistical oddity if not for the volumes of hydrocarbons involved. There are nearly 450 billion barrels in the ground in Alberta. Seventy-one percent of that total (318 billion barrels) is in the Grosmont formation – a massive structure underlying much of the Athabasca oilsands deposit. Another 65 billion barrels of bitumen can be found in the Nisku carbonate, which is associated with the Grosmont. In Peace Country, the bitumen-saturated carbonates contain as much oil as the Peace River oilsands deposit – once again, about 65 billion barrels.

Here’s another way to put those numbers in perspective. Alberta’s bitumen deposits comprise the largest petroleum resource in the world. One fourth of that resource is in carbonate reservoirs.

There is a catch, of course. Like the oilsands many years ago, there are no economic ways to produce oil from these deposits yet.
(24 October 2008)

Some Regret Locking In Price for Oil

Ken Belson, New York Times
After the rapid run-up in oil and gas prices over the past two years, many consumers have been happy to see them subside in recent weeks.

But then there are those who tried to outsmart the market by signing contracts this summer — when prices peaked — locking in rates for delivering home heating oil through the winter. They will most likely end up paying more than their neighbors to heat their homes and apartments this winter.

… Home heating oil companies say they are being unfairly blamed for circumstances often beyond their control, noting that oil prices are set by large refiners and wholesalers. When customers signed fixed-price contracts this summer, their heating oil companies bought the fuel from wholesalers at a similar price, making it difficult to cut prices now.

“You are playing the market, and a contract works both ways,” said John Maniscalco, the executive vice president of the New York Oil Heating Association. “If you lock in a fixed price, if the price goes up you’re going to feel like a hero. If it goes down and your neighbors are paying less, you’ll feel different.”
(22 October 2008)

Big Oil’s Last Stand

Antonia Juhasz, Foreign Policy in Focus
… “The tyranny of oil” powerfully encapsulates the feelings not only of Americans, but of people the world over. Without viable and accessible alternatives, entire economies suffer when increasing proportions of national budgets must be used to purchase oil. And on an individual level, families, facing the same lack of alternatives, forgo basic necessities when gasoline prices skyrocket. Communities that live where oil is found — from Ecuador to Nigeria to Iraq — experience the tyranny of daily human rights abuses, violence, and war. The tyranny of environmental pollution, public health risks, and climate destruction is created at every stage of oil use, from exploration to production, from transport to refining, from consumption to disposal. And the political tyranny exercised by the masters of the oil industry corrupts democracy and destroys our ability to choose how much we will sacrifice in oil’s name.

… Yet for all its enduring power, Big Oil finds itself in a precarious position today. While it is at its financial and political pinnacle, it faces the greatest threat to its existence in its 150-plus-year history: oil, the resource on which it depends, is growing far more difficult to come by.

Today the Earth is just about tapped out of conventional oil. There are no new vast, untouched reserves sitting close to the earth’s surface just waiting to be discovered.

… Outside of the Middle East, the oil that is left is becoming more technologically difficult, expensive, and environmentally destructive to acquire. Conventional oil is found offshore below the world’s ocean waters, making its production risky, environmentally harmful, and destructive to coastal communities.

… Big Oil would like us to believe that it is part of the solution, that it has seen the writing on the wall and knows that the future is clean energy. The companies’ advertising campaigns would have us believe that they are in fact using their vast resources to embrace a clean, green, sustainable, and renewable energy future. Do not believe the hype. None of the companies invests more than 4% of its entire annual expenditures on clean, renewable, alternative forms of energy. Big Oil is deeply committed to remaining Big Oil and is putting all its considerable resources behind this effort.

And Big Oil thrives on secrecy, a lack of transparency, and control over information. We can only address its power by pulling back its veil.

Antonia Juhasz is a Foreign Policy In Focus senior analyst and the author of The Tyranny of Oil: the World’s Most Powerful Industry, and What We Must Do To Stop It (William Morrow 2008), of which the above article is an edited excerpt.

(22 October 2008)
Also at Asia Times.