Grand Rapids could be Imperial Oil’s next bitumen bonanza
According to Calgary-based investment house Peters & Co., Imperial Oil Ltd.’s Kearl oil sands project was 87 per cent complete at the end of 2011. And it was expecting the Imperial Oil to provide more definitive timing on the start-up of the $10.9 billion, 110,000 barrels per day (bpd) Kearl Phase 1 during its investor update tomorrow (March 21).
The Kearl project is well-known in Alberta circles and Imperial Oil plans to eventually produce 345,000 bpd at the mega-mine. What is less known is the firm has another large (and so far untapped) resource at its leases in Cold Lake that could drive future production growth at the company in tandem with Kearl. The formation is known as Grand Rapids.
In a research note to clients today, Peters writes that the formation is approximately 400 meters deep and over 100 meters thick and has varying bitumen saturation within it. The key fact from the report: Peters believes between 0.9 to 1.5 billion of approximately 1.8 billion barrels in place could be recovered.
FirstEnergy Capital has also noticed the potential of Grand Rapids and thinks it’s only a matter of time before Imperial Oil starts examining projects to exploit the formation. Those projects would likely use steam assisted gravity drainage technology to extract the bitumen.
And unlike the Kearl project, which is located 70 kilometers north of Fort McMurray in a remote area, the economics of development at Grand Rapids would be bolstered by the fact it’s located in Cold Lake, where Imperial Oil produced 160,000 bpd of bitumen in 2011. “Imperial will eventually be looking at projects to exploit that resource, which we suspect could be quite economic given that infrastructure (roads, pipelines) is already in place,” FirstEnergy writes.
I should add that Imperial Oil is not the only company looking to crack the Grand Rapids formation. Canadian Natural Resources Ltd., Cenovus Energy Inc., BlackPearl Resources and Laricina Energy Ltd. are some of the other companies with development plans in Grand Rapids.