Alberta oilsands approvals draw mixed reviews, doubt about project viability

“The low price of oil has put all these projects on hold, but the accelerating transition to renewable energy will keep them there,” he said.

“It’s time for Alberta to focus on creating green jobs developing its abundant renewable energy sources, not gambling on high-carbon oil.”

The most advanced of the three oilsands projects is the 80,000-bpd Blackrod project proposed by Calgary-based BlackPearl Resources (TSX:PXX).

CEO John Festival said he is relieved to win official endorsement from the provincial government more than four years after filing an application in May 2012.

“They were a little slow but they were trying to understand the process, what it meant, what were the ramifications, how it all worked,” he said on Friday. “We were pleased with it, it just took a little longer.”

Analysts estimate the first 20,000-barrel-per-day phase at Blackrod will cost about $800 million to build, and Festival says that number is in the ballpark. Detailed estimates will come if the project is approved in future, he said.

Festival said a pilot project operating at the Blackrod site since 2011 has proven the viability of the resource and suggests it will make money when benchmark oil prices are between US$55 and $60 per barrel. Oil has recently been trading in the mid-$40s.

In a report, analyst Nick Lupick of AltaCorp Capital agreed that the pilot project’s success improves the chances that Blackrod will be built but cautioned that BlackPearl can’t afford to build it on its own and will need a joint venture partner. He estimated the first phase was unlikely to come on stream until the middle of the next decade.

Alberta Energy also announced Thursday approval of the 3,000-bpd Saleski oilsands pilot project proposed by heavy oil major Husky Energy (TSX:HSE) and the 12,000-bpd Wildwood project by private Surmont Energy, both of Calgary. All three projects would use steam injected through wells to melt the heavy, sticky oil and allow it to be pumped to surface.

Husky spokesman Mel Duvall said Saleski, for which an application was filed in 2013, has not been sanctioned and would have to be reviewed to be included in a future budget. He didn’t have a cost estimate for its construction.

Surmont CEO Mark Smith said the company’s application process started in October 2012.

He said the company had interest from backers in the past to help build the project, estimated to cost about US$375 million, but more work needs to be done to secure financial backing now that the approval is in hand.

Alberta Energy said approvals were granted after multiple environmental assessments, consultations with local indigenous and non-indigenous communities, and positive recommendations by the Alberta Energy Regulator.

It said builders must still file applications for specific construction and drilling permits and licences.

The NDP government last approved an oilsands project in October 2015, a 9,000-barrel-a-day project proposed by Devon Canada near Cold Lake, Alta.

Follow @HealingSlowly on Twitter.

Dan Healing, The Canadian Press

by Canadian Press

Alberta oilsands approvals draw mixed reviews, doubt about project viability

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