Reality check: Oil sands projects in Alberta have a history of disappointing openings

A humbling heritage of setbacks taught leaders in the early oil sands developments not to be cocky and to avoid rash promises

October 27, 2008

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“You don’t just push the buttons and it all works perfectly,” John Langille warned at a conference held by TD Securities.

“Going out into the field is a completely different story,” he told a crowd accustomed to tapping digital information in climate-controlled offices.

As vice-chairman of Canadian Natural Resources Ltd., Langille was trying to explain gritty bitumen megaproject realities to impatient financial analysts and stock brokers. While putting finishing touches on the $9.3-billion Horizon Project, CNRL portrayed its schedule for a summer-quarter 2008 start on producing 110,000 barrels a day as a target. It was not a pledge investors could take to the bank.

Similar caution prevailed at the $6-billion Long Lake development. Owners Nexen Inc. and OPTI Canada held off setting a firm schedule of dates and volumes.

The hesitation and reality checks maintained an oil sands tradition of big, sometimes embarrassing differences between official programs and the behavior of projects. The contrasts date back to the grand opening on Sept. 30, 1967, of the first bitumen mining and synthetic crude oil upgrader complex, Great Canadian Oil Sands (now Suncor).

Memories of the event still inspire wry chuckles among retired industry pioneers like Bert MacKay, who rose from GCOS blue-collar power engineer into management and prominence in Fort McMurray as a founder of its popular Oil Sands Discovery Centre.

At the plant site, 600 dignitaries flown in by 30 chartered aircraft gathered inside a hall-sized inflatable shelter nicknamed “the bubble.” They heard a glowing industrial inauguration address by the premier, the late Ernest Manning.

“This is a red-letter day, not only for Canada but for all North America. No other event in Canada’s centennial year is more important or significant,” the premier declared. “It is fitting that we are gathered here today to dedicate this plant not merely to the production of oil but to the continual progress and enrichment of mankind.”

In blustery cold outside the official bubble, the production line of open pit mining bucket wheels, bitumen extraction vessels and upgrader systems was out of action. Operations were shut down by one of the equipment glitches that made GCOS notorious for expensive disruptions in its early years.

Philadelphia magnate J. Howard Pew, chairman of GCOS majority owner Sun Oil, spent considerable time on site watching the project being built and plainly knew what was happening. His speech at the ribbon-cutting set the tone of wary determination echoed to this day by industry captains like Langille.

“At the outset I told our stockholders that unless projects of this character were conceived and started, our organization would become soft and eventually useless,” Pew said.

Eleven years later, the oil sands recipe of a rugged natural environment, heavy equipment, intricate production lines and high volumes of hazardous materials taught a similar congregation of officials another lesson in humility.

On the eve of the Syncrude plant’s mid-1978 inauguration gala, a plant startup fire spewed out a colossal smoke column. Production halted and participants in the occasion jokingly recorded it as a dry opening.

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