february 2009 issue
Doing Business
Hydro Project Moves Forward
BY NORDAHL FLAKSTAD
Freelance Writer
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THE LONG RUN |
Development of the Dunvegan Hydroelectric Project on the Peace River is in the public interest, a review panel has concluded. The project of Glacier Power Ltd., a subsidiary of Canadian Hydro Developers Inc., will provide a stable and reliable source of green power and will be a net benefit to the province, the joint review panel determined.
The panel was drawn from the Natural Resources Conservation Board, the Alberta Utilities Commission and the Canadian Environmental Assessment Agency. Joint review panels are struck to save time and money when projects require approval from federal and other levels of government and agencies.
But even with a joint review, this stage been a long time coming for the run-of-the-river project, planned for 90 kilometres west of the town of Peace River. Dunvegan has been under development and consideration for the better part of a decade.
This year, the proponent will seek permits for construction, complete a detailed design and finalize construction costs.
TransCanada Joins
Carbon Capture Project
TransCanada Pipelines Ltd. will help develop Project Pioneer, Canada’s first fully integrated carbon capture and storage plant. Announced last April, Project Pioneer is led by TransAlta Corp. and Alstom Canada.
When complete, it will be one of the largest carbon capture and storage facilities in the world and the first to have an integrated underground storage system. The project will pilot Alstom Canada’s chilled ammonia process and be linked to one of TransAlta’s coal-fired plants near Wabamun Lake area, west of Edmonton. The CO2 will be used for enhanced oil recovery and also injected into a permanent geological storage site.
Meanwhile, TransAlta is winding down coal mining in the Wabamun area, after nearly a century of operations. It plans to shut down one of its three power plants there — the oldest one, in the village of Wabamun — in a little more than a year.
Devon Canada
Buys Wind Turbine
For Alberta Gas Plant
AAER Inc. of Montreal will supply a 1.5-MW wind turbine for Devon Canada Corp.’s Coleman Gas Plant in the Crowsnest Pass. The A-1500 turbine is scheduled for delivery in the third quarter of 2009.
Petro-Canada
Slashes Spending
By 35 Per Cent
Petro-Canada’s board has approved a 2009 capital and exploration expenditure program of up to just $4 billion — that’s a 35 per cent decline from the $6.2 billion in comparable spending in 2008.
The company’s 2009 program directs $2.1 billion to growth projects, exploration and new ventures and $1.3 billion to replace reserves in core areas. Petro-Canada also expects to invest $360 million to enhance existing assets.
As the lead partner in the $13-billion Fort Hills oilsands mine, Petro-Canada earlier deferred until later this year a decision on proceeding with the project. In addition, the Fort Hills consortium has placed on permanent hold its plans for a $9.9-billion upgrader in the Edmonton area.
In a related matter, a major ATCO Structures contract has been cancelled. ATCO won the contract in May 2008 to manufacture and install a 2,000-person workforce housing camp for the Fort Hills project, north of Fort McMurray.
ATCO Structures had completed about 25 per cent of its contract but further construction is now stopped.
EPCOR Completes
Underground Link
To Downtown Edmonton
EPCOR has completed a three-year initiative to lay a 10.5-km underground transmission cable in Edmonton. The 240-kilovolt line will accommodate rapidly rising electrical demand in the city core, while improving security of supply there as well.
Petrobank Active
On Several Fronts
Petrobank Energy and Resources Ltd.’s patented type of toe-to-heel extraction technology is moving forward. The company has filed an application for its May River project with Alberta Environment and the Energy Resources Conservation Board.
The 10,000 bbl/d commercial demonstration project will put Petrobank’s THAI technology to work. THAI stands for Toe-to-Heel Air Injection.
The project will be located on oilsands leases two km from the current Whitesands pilot project site for THAI. To be built in phases, May River would reach a capacity of up to 100,000 bbl/d of partially upgraded bitumen.
In addition, Petrobank announced entry into a technology licensing and joint venture with True Energy Trust to use THAI on portions of True’s Kerrobert heavy-oil property in Saskatchewan.
Finning Announces Layoffs
Finning (Canada) has laid off 160 employees in British Columbia and Alberta. The layoffs, including 28 in the Edmonton headquarters, come in response to slowing sales, says the company. It still has 4,300 employees in Alberta, B.C. and the territories.
Bruce Power Shifts Site
For Planned Nuclear Plant
Bruce Power had already applied to prepare a site for a nuclear power plant near Lac Cardinal. But amid concerns about potential effects on an aquifer, it’s now looking at another location.
Bruce has temporarily withdrawn the Lac Cardinal application for a property about 30 km west of the town of Peace River. Now the company can reapply for a new site, this one 30 kilometres north of the town.
With existing generating stations in Ontario, Bruce is already a player in the nuclear industry. It may have other projects in mind, too. The company recently released a feasibility study stating that nuclear energy could contribute 1,000 megawatts of electricity to Saskatchewan’s generation mix by 2020.
The study concluded that a Saskatchewan plant would be best suited to a region extending from Lloydminster and including the Battlefords and Prince Albert. It is estimated that a plant there would create 2,000 jobs during construction and 1,000 permanent jobs over 60 years of operation.
Stantec to Lead
Airport Expansion
Stantec has signed a letter of intent to design a terminal expansion at the Edmonton International Airport. The project, featuring 40,000 square metres of new floor space, will increase capacity by about 50 per cent for the estimated nine million passengers a year using the airport.
Stantec is providing full design services for the project, including architectural, mechanical, electrical, structural and LEED consulting services. LEED is the trademarked Leadership in Energy and Environmental Design program.
The project’s estimated completion date is late 2012.
In another development, Stantec has acquired Jacques Whitford, an environmental consulting services firm with more than 1,700 employees and 40 offices, mainly in Canada. Founded in 1972 and headquartered in Halifax, Jacques Whitford is involved internationally in providing services in engineering, environmental and earth services. The employee-owned firm has completed projects in more than 65 countries.
Infrastructure Gets Boost
From Gas Tax Fund
Even before the January federal budget, Alberta and its municipalities were looking at increased infrastructure money from the federal coffers.
The federal Gas Tax Fund will provide Alberta with $798 million of infrastructure funding from 2010 to 2014. The funding is made possible by an extension of the gas-tax funding agreement of the governments of Canada and Alberta.
In addition to long-term planning, eligible projects include improvements to public transit, community energy, local roads, and water, wastewater and solid waste infrastructure.
Municipalities may also borrow against future gas tax funding, allowing them to move forward on eligible projects right away.
The Gas Tax Fund is a component of Building Canada, the federal government’s long-term infrastructure plan.
Meanwhile, the Government of Alberta has announced communities with populations below 100,000 can apply to the Building Canada Fund – Communities Component for support of infrastructure spending. A federal-provincial committee will evaluate projects through a competitive application-based process closing March 15. The federal and provincial governments will each contribute $88 million.
Nexen Increases Stake
In Long Lake Project
Nexen Inc. has acquired an additional 15 per cent interest in the Long Lake oilsands project and joint venture lands. The increase in its stake comes from its project partner, OPTI Canada Ltd.
Nexen now owns 65 per cent of the project and lands, and will be the sole operator of the resource and the associated upgrader. OPTI will have a 35 per cent working interest in all the joint venture assets, including Phase 1 of the project.
When fully operational, Phase 1 should produce 72,000 bbl/d of bitumen, estimates suggest. OPTI reports bitumen production volumes averaged 15,100 bbl/d in October and over 20,000 bb/d in early November.
StatoilHydro Withdraws
Upgrader Application
After an earlier postponement, StatoilHydro Canada Ltd. has withdrawn its regulatory application for a bitumen upgrader in the Industrial Heartland near Edmonton. The
company will continue to monitor costs and prices, and to assess downstream options.
Said a StatoilHydro release: “Prohibitive construction costs, the state of the global economy, an uncertain oil price outlook and a lack of legislative clarity are the main reasons for this decision.”
In May, the Norwegian-controlled company postponed the upgrader by two years to 2016.
The withdrawal will not affect StatoilHydro’s upstream oilsands activities, including the Leismer project. Leismer, using steam-assisted gravity drainage technology, is geared for a late 2010 startup.
Further Delay Forecast
For Mackenzie Gas Project
The panel reviewing the proposed $17-billion Mackenzie Gas Project now has set December 2009 as a target date for the release of its report. This represents a further delay for what would be Canada’s largest private-sector construction project.
Robert Hornal, chair of the joint review panel, said its members are “working full-time with our staff to complete the report in an efficient, yet comprehensive and responsible manner, considering the enormous amount of information submitted. In determining the release date of its report, the panel has carefully reviewed its work plan and its considerable progress so far.
“We understand that there is tremendous interest in the panel’s findings, but we are required and committed to base our findings on a full and fair review of the evidence.”
The panel concluded its public hearings in Inuvik in November 2007. It held 40 days of informal hearings in 27 communities that would be affected by the route of the proposed 1,220-kilometre Mackenzie Valley Pipeline. A further 75 days of technical hearings were held in the five largest communities from Inuvik to Hay River.
Edmonton Rec Centre
To Cost $107 Million
The City of Edmonton now estimates it will spend $107 million for a new recreation centre in its southwest. The projected cost has risen by $7.7 million, mainly to cover costs associated with unstable soil conditions at the site.
The centre, which will include the first fourplex arena in Edmonton, is scheduled for completion in 2010.
Suncor Back on Track
After November Fire
Suncor Energy Inc. notched a solid December at its oilsands facility, despite a late November fire and harsh weather. Production averaged 235,000 bbl/d for the month, meaning the company achieved a revised target.
The company completed unplanned maintenance activities following the fire. Production for the entire year of 2008 averaged 228,000 bbl/d.
Western Canadian Coal
Suspends Willow Creek Work
Western Canadian Coal Corp. has placed a hold on its Willow Creek Mine in northeastern British Columbia. The problem is global economic uncertainty and its effect on demand for metallurgical coal, the company says.
Once mining resumes, saleable coal will be available for markets within 90 days.
BA Energy Attempts
To Sort Out Finances
BA Energy, which last fall put a construction hold on its partially completed, $4-billion upgrader near Edmonton, was granted more time by a Calgary court to work out its affairs. The company filed for bankruptcy protection in mid-January, amid concerns that a major lender would recall a loan to its parent company, Value Creation Inc.
BA has already spent $546 million on the Fort Saskatchewan upgrader.