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Alberta Greenlights Oilsands Projects Worth $3 Billion

Oil Sands

Three new oilsands projects have been approved by the government of Alberta—the first after the authorities capped greenhouse gas emissions from oilsands to 100 megatons. The projects will together produce 2.5 megatons of greenhouse gases.

This approval, which could see fresh investments of US$3 billion (C$4 bln), does not necessarily mean the projects will go ahead, however. Yet, they are the first to be approved after the introduction of the emission cap requirement, which is part of Alberta’s Climate Leadership Plan. The plan, a spokesman for the Energy Ministry of the province said, was aimed at encouraging businesses to find innovative, cost-efficient ways of making their operations less harmful to the environment.

The first of the three is Husky Energy’s Saleski project in the Atahbasca Basin, with reserves estimated at 32.2 billion barrels initially-in-place and initial production seen at 3,000 bpd. The project has not yet gotten firm approval by the company.

The second is the Wildwood project of Surmont Energy, which in its first phase would produce 12,000 barrels of heavy crude daily. Commenting on the approvals, Surmont’s CEO Mark Smith noted that the review of the project by all relevant government agencies started back in 2012 and the approval process took a lot more than Surmont had expected. The investments needed for Wildwood are estimated at around US$375 million.

The third project, Blackrod, is owned by BlackPearl Resources and features 180 million barrels of proven and probable reserves. Test wells at the field produced an average of 550 bpd but BlackPearl eyes daily rates of 80,000 barrels of crude. Related: Despite Criticism, Prime Minister May Gives Go-Ahead To Hinkley Point

None of the companies have made a final investment decision on the three projects, and in light of the still depressed price environment, it’s anyone’s guess if any of the three will go ahead.

A recent report from TD Economics concluded the current recession in Alberta, brought about by the oil price crisis, is among the worst the province has had to endure. For this year, the research company predicts a 3-percent contraction for Alberta’s GDP, which would make the cumulative shrinkage since mid-2014—the start of the price slide—a whopping 6.5 percent.

By Irina Slav for Oilprice.com

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