Alberta Premier Rachel Notley cut the ribbon that marked the official opening of an oil sands expansion project near Fort McMurray on Wednesday. The new project is expected to produce 20,000 bpd of oil by mid-2018, thanks to a US$1.64 billion (2 billion Canadian dollars) investment.
Japan Petroleum Exploration Co (Japex) and Nexen Energy ULC—a wholly owned subsidiary of China’s CNOOC—started last month the production of ultra-heavy crude oil from the Hangingstone Oil Sands Project.
Japex and Nexen launched production using the Steam-Assisted Gravity Drainage (SAGD) method, at a current bitumen production rate of 1,000 bpd. After wells get switched to full production mode, the companies expect production volume at the Hangingstone project to reach 20,000 bpd by the second half of 2018.
Japex’s subsidiary, Japan Canada Oil Sands Limited (Jacos), holds a 75- percent interest in the project and is its operator, while Nexen owns the other 25-percent stake.
The investment in this project was the largest investment made in Alberta by Jacos in its 40-year history in the province and the largest investment made globally by Jacos’ parent Japex, the province said in a statement.
“Good jobs for Albertans, billions of dollars in new investment and a growing economy – that’s what this expansion project means. I want to thank JACOS for their work here and underscore that it’s never been more important for us to get new pipelines built, which will help diversify our markets and further strengthen our ties with Asia,” Notley said.
Alberta’s provincial government estimates that economic growth exceeded expectations in the first half of 2017.
“Nearly every sector of the Alberta economy is rebounding, spurring recovery in exports and manufacturing and adding 17,000 jobs since January,” it says in its latest economic outlook. Real GDP is expected to rise by 3.1 percent this year, compared to a 2.6-percent growth forecast in the budget 2017. Lower energy prices still weigh on corporate profits, household income, and government revenues, but drilling activity has been strong in 2017, Alberta’s government says. The number of active rigs in Alberta averaged 126 in August, up 67 percent annually. Year-to-date, the number of active rigs has averaged 127, double the amount from 2016. As a result, Alberta expects conventional oil and gas investment to rise by 40 percent in 2017, but to be partially offset by a larger-than-expected drop in non-conventional investment, which is now seen to decline by 14 percent.
By Tsvetana Paraskova for Oilprice.com
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