Alberta Investment Management Corporation looks after oil patch assets
In a deal with Precision Drilling that some business rivals and free enterprise purists derided as unfair help, Alberta Investment Management Corp. made its fifth foray into the oil and gas industry as custodian of the provincial government’s petroleum-based wealth
Delicate Balance
Oil sands political risk rated as still manageable
Industry captains refuse to be blown off oil sands courses by bluster from hard green factions among environmentalists. While the dirty-oil attack campaign poses a political risk in the United States, the danger that Washington will restrict imports from Alberta is not great enough to cause a switch in target markets, says ConocoPhillips Canada president Kevin Meyers.
“Has this risk increased to the point where we look for alternative outlets? The answer is no,” Meyers told a spring media briefing in the company’s Calgary head office. “We still believe it’s manageable.”
Constant efforts are being made to ensure the American public and its political decision-makers understand the economic and energy security advantages of the U.S. oil supply relationship with Canada, Meyers said. A search is underway for a “sweet spot” in balancing environmental and industrial interests, he added.
“We believe we can find it. We’re trying to get that balanced equation. There is no hard answer. You just keep working on it every day. We believe when the facts are out there, the public will understand.”
ConocoPhillips and EnCana Corp. continue on course with their oil sands partnership, Meyers said. The deal’s division of labor still calls for increasing bitumen production from EnCana oil sands leases for export to renovated ConocoPhillips refineries in Illinois and Texas.
Despite the wild ride in oil prices since the partnership formed about three years ago, new regulatory applications were filed this spring for future bitumen production additions. Meyers described the step as “maintaining our position in the queue” of projects awaiting approval.
The next large new developments were probably pushed as much as several years farther into the future by the 2008-09 oil price decline, but it is not possible to set firm target dates, the ConocoPhillips Canada president said. Bitumen deposits, the efficiency of production systems and expenses such as natural gas fuel for thermal extraction processes are all highly variable. Construction, equipment, materials and labor costs have also become moving targets in the global economic upheaval. As a result there is no one oil price where projects again become immediately viable, Meyers said.
Coping with adversity is standard operating procedure for the Alberta bitumen belt, Suncor Energy Inc. president Rick George reminded a spring meeting of the Calgary chapter of the CFA Institute.
“The first 25 years were a struggle just to survive,” he said in recalling birth pangs of the Great Canadian Oil Sands project that started the industry in 1967. “It seemed as if when the operation wasn’t frozen, it was on fire.”
Suncor’s merger with Petro-Canada, paid for entirely with a share swap valued at $19.2 billion rather than cash or debt, will eventually contribute to an oil sands revival, George predicted.
Petro-Canada laid off about 200 staff as work on its delayed Fort Hills project wound down. The firm’s oil sands chief, Neil Camarta, was transferred into natural gas development. But the combination should result in some projects going ahead sooner than they would have otherwise, George said. The entire industry will likely run at a “more measured pace” than during the oil sands rush since 2000, he predicted.
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