Alberta oil deposits could top famed Saudi reserves

The amount of untapped oil in Alberta is enough to make the Middle East jealous. Just give it 25 years

By Gordon Jaremko

December 01, 2009

As the shock waves of the global credit crisis and recession die down, a rhetorical question that inspires optimistic answers has made a comeback in corporate presentations to investors and governments. How big can Alberta become on the world energy scene?

Number 1 – even bigger than Saudi Arabia, says Glen Schmidt, president of Laricina Energy Ltd. and chairman of the In Situ Oil Sands Alliance. “We have Middle East-quality rock (geology). We have Middle East-quantity oil.”

As former president of Deer Creek Energy, he has a record of being believed. French oil giant Total SA bought the Calgary firm for $1.4 billion in 2005 to obtain its Joslyn oil sands mining property north of Fort McMurray. Laricina is led by ex-Deer Creek personnel who used their takeover proceeds to start their second oil sands project, this time south of Fort McMurray on a deeper bitumen formation that requires in situ or underground extraction methods.

Schmidt compares the new geological target, known as the Grosmont Carbonate, to Saudi Arabia’s legendary Ghawar Carbonate – the world’s richest oilfield, known as “the elephant of elephants” in the industry’s jargon for its biggest discoveries. At 55 kilometers across and 225 kilometers from end to end, the Grosmont is about the same size and shape as the Ghawar, Schmidt says.

Current estimates of the Alberta formation peg its total bitumen content at 318 billion barrels. The amount that could be produced with currently conceivable technology is projected to be 100 billion barrels. Since there is no Grosmont production yet, its colossal potential is left out by official calculations of established oil sands reserves as 170 billion barrels of bitumen, the world’s second-biggest supply after the Saudi endowment.

Periodic Grosmont experiments since 1979 have shown its oil can be tapped, Schmidt says. “That, if recognized, would make Alberta reserves greater than Saudi Arabia’s.” Add the Grosmont to the accepted estimates, and the new figure for bitumen belt wealth awaiting production plus other Alberta reserves nudges 300 billion barrels, topping the Saudi 270 billion. Viewed in wider global perspective, Alberta potentially has one-fifth of the world’s supplies.
In late 2010, Larcina aims to start proving its target formation deserves to be recognized by completing a pilot plant for extended production trials of 1,800 barrels per day. Plans call for innovations with a combination of well-tried steam and experimental solvent injections.

The grand growth vision has inspired an investor following. In its first four years, the Calgary oil sands firm raised about $500 million with sales of corporate paper.

The Laricina team and its supporters are in good company. Royal Dutch Shell is still thinking big about the oil sands. Peter Voser, the Swiss chief executive officer of the international giant foresees a potential starring role for Alberta on the global energy stage. The vision showed when he visited Calgary in September to address an industry, finance and government who’s who at the annual Spruce Meadows round table, an annual fixture on the global business calendar staged by the Southern family during an international show jumping tournament at their equestrian center on the southern edge of the Alberta oil capital.

“I see a more international role quite clearly,” Voser told a news conference. With its mammoth resources, Alberta stands out as a potential supplier of the Asia-Pacific region, where Shell expects oil demand to keep on growing. “The oil sands are well placed to take advantage of that.”

Voser said a new pipeline from Alberta, across British Columbia to a proposed supertanker terminal on the Pacific coast will obviously be needed to carry out the big oil sands vision. He stopped short of saying when or how Shell might throw its weight behind plans to build an international export route from Edmonton to Kitimat.

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