31 March 2009 20:20 [Source: ICIS news]
SAN ANTONIO, Texas (ICIS news)--Energy development in the oil sands of western Canada has collapsed with the fall of oil prices, two industry officials said on Tuesday, but a NOVA Chemicals executive predicted the boom will eventually return.
Jacobs Engineering senior vice president of hydrocarbons Peter Kelly said the new project scenario in western ?xml:namespace>
Speaking at a forum of the International Petrochemical Conference, Kelly said oil prices will have to move back up to a level of at least $65/bbl for many of those oil sands projects to see the light of day.
The costs of some of those projects were coming in at more than 50% than the original estimates, Kelly said.
Ed Merrow, founder and president of Independent Project Analysis, who also spoke at the forum, agreed that soaring project costs in the oil sands contributed to the downfall. “The overheated market has killed the goose, simply because we have overpriced ourselves out of the market,” he said.
Adding to the situation,
Despite the gloomy scenario, NOVA Chemicals’ Grant Thomson, president, olefins and feedstocks, said on the sidelines of the conference that there is still a future in development of the oil sands, although perhaps not as soon as many had hoped.
“There were a lot of oil sands projects that were on the books, getting ready to start and a number of those have been shelved or delayed,” Thomson said.
“It is because of the fact that people don’t want to spend capital right now - but I am convinced those projects will go forward, it is just a matter of when they go forward,” Thomson continued.
Some 1m-1.5m bbl/day of oil are now extracted from the oil sands, and projections had been that 3m bbl/day would come out of the region by 2015, Thomson said.
“I think we still get to 3m bbl, but I don’t think it will be 2015,” he said.
NOVA still sees enormous feedstock potential from the oil sands, Thomson added.
NOVA signed a letter of intent in 2007 with natural gas and pipeline company Williams to process the gases from oil sands. Bitumen is extracted from the sands, which is then converted into synthetic crude.
Sponsored by the National Petrochemical & Refiners Association (NPRA), the International Petrochemical Conference runs through Tuesday.
Can't make it to San Antonio for NPRA? Barbara Ortner goes behind the scenes in her Chemicals Confidential blog
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