ConocoPhillips, Total to quadruple production from Canada's Surmount oil sands news
21 January 2010

Global oil majors ConocoPhillips and Total SA announced a multi-billion dollar expansion of Surmount oil sands project in Canada, bringing into limelight the huge potential of Alberta's oil sands resources to meet the future energy needs of North America.

The Surmount project which is located approximately 63 kilometers southeast of Fort McMurray, Alberta, in the Athabasca oil sands region, is a 50:50 joint venture between US oil and gas company ConocoPhillips and Total E&P Canada Ltd, a wholly owned subsidiary of France's Total SA.

The first phase of the project has a crude oil capacity of 27,000 barrels per day (bpd). The partners announced the second phase of the project which will increase Surmount's gross production capacity fourfold to 110,000 bpd by 2015.

ConocoPhillips president and chief operation officer John Carrig said, "Surmont is an important part of our oil sands portfolio and we're pleased to announce its next phase of development.''

"The oil sands are an area of significant future oil production growth and are important for short- and long-term energy and economic security in North America. This phase of Surmont will also result in a significant increase in construction and operating jobs," he further said.

Initial work on the phase 2 expansion is slated to begin in 2010. Financial details of the project have not been disclosed. The phase 1 which is much smaller, involved a capital expenditure of around $1.4 billion.

It is expected that the project will create up to 2,500 construction jobs and 300 regular positions.

Northern Alberta's oil sands resource is one of the world's largest oil deposits which is considered second in size to those found in Saudi Arabia. However, extraction of the heavy crude from oil sands poses many technological challenges.

ConocoPhillips uses a production technology known as 'Steam-Assisted Gravity Drainage'(SAGD) to recover heavy oil buried deep beneath the earth. It involves pushing steam through pipelines into an injection well for heating the heavy oil so that it becomes viscous and starts flowing. The oil is then pumped out through the production well to the surface where it is treated and separated.

"We believe that our oil sands projects and the conversion of crude oil produced from oil sands to fuel can be conducted in an environmentally sustainable manner, Carrig said.

''We anticipate spending more than $300 million in heavy oil technology research and development over the next five years to improve economic and environmental performance," he added.

In another oil sands venture, ConocoPhillips has a 50:50 partnership with EnCana Corporation for the Foster Creek and Christina Lake SAGD projects. ConocoPhillips also holds 9 per cent stake in Syncrude Canada Ltd, the world's largest producer of crude oil from oil sands.  which the company told in October that it intends to sell.

Total E&P Canada's other oil sands projects include 100,000 bpd Joslyn North mine in the northwest of Fort McMurray, an upgrader in the northeast of Saskatchewan and also Northern Lights, a 50:50 joint venture with China's Sinopec Corporation in the northeast of McMurray. 

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ConocoPhillips, Total to quadruple production from Canada's Surmount oil sands