Innovators toil to revive Canada oil sands as majors exit

Tue Jun 20, 2017 7:52am EDT
 
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By Nia Williams and Ernest Scheyder

CALGARY, Alberta/HOUSTON (Reuters) - In the boreal forests and on the remote prairies of Alberta, a handful of firms are running pilot projects they hope will end a two-decade drought in innovation and stem the exodus of top global energy firms from Canada's oil sands.

They are searching for a breakthrough that will cut the cost of pumping the tar-like oil from the country's vast underground bitumen reservoirs and better compete with the booming shale industry in the United States.

If they fail, a bigger chunk of the world's third-largest oil reserves will stay in the ground. Canada's oil sands sector has become one of the biggest victims of the global oil price crash that began in 2014 when top OPEC producer Saudi Arabia flooded the market with cheap crude to drive out high cost competitors.

This year alone, oil majors have sold over $22.5 billion of assets in Canada's energy industry, and been lured south to invest in the higher returns of U.S. shale.

Joseph Kuhach is among the entrepreneurs in Canada hoping they can turn the tide. He runs a small Calgary-based firm, Nsolv, that is testing the use of solvents to liquefy the bitumen buried in the sands and make it flow as oil.

Kuhach says using solvents can cut 20 to 40 percent from the cost of producing the oil. The technique currently used is to use steam to heat the sands underground to extract the oil.

It's a hard sell, he said, to Canadian producers struggling with low oil prices. They are reluctant to invest in a multi-million dollar technology that is unproven on a commercial scale, he said.

"The comment I hear so often when I am talking to companies is, 'We want to be the very first in line to be second'," said Kuhach. "It's easier to go after incremental improvements that they can back away from with no great cost and no great risk."   Continued...

 
FILE PHOTO - The processing facility at the Suncor oil sands operations near Fort McMurray, Alberta, Canada on September 17, 2014.  REUTERS/Todd Korol/File Photo