Petrobank’s Kerrobert project in SaskatchewanPeter Cheung
Less than a week after reserve evaluators dealt a severe blow to a new oil sands technology, one of the chief champions of that technology has been named head of Connacher Oil and Gas Ltd., a company with its own struggles in the oil sands.
For more than a decade, Chris Bloomer served as an executive at Petrobank Energy and Resources Ltd., the company pursuing the THAI process that proposed underground combustion as a way to melt bitumen out of the oil sands.
THAI (Toe-to-Heel-Air-Injection) held the promise of reducing the greenhouse gas emissions from oil sands production while producing oil that, because of the heat generated during underground combustion, was lighter – and therefore more valuable – than crude produced through other processes.
Mr. Bloomer, most recently Petrobank's senior vice-president and chief operating officer in heavy oil, was among THAI's most vocal supporters, saying in 2010 that it could "play a very big role in the oil sands." Even in 2011, when Petrobank pulled THAI from an oil sands demonstration project, the company said red tape, rather than technical problems, were to blame. At that time, Petrobank diverted its attention to Saskatchewan, where it was using THAI in a non-oil sands play called Kerrobert.
"We really haven't encountered what I would say is a fatal flaw," Mr. Bloomer told The Globe and Mail in a late 2012 interview.
But late last week, after its Kerrobert THAI well averaged 307 barrels per day – up just two from the previous quarter – reserve evaluators McDaniel and Associates Consultants Ltd. effectively decided the technology was not good enough to become a commercial technology. Petrobank, in a statement, said "proved plus probable ("2P") reserves at our Kerrobert THAI(R) project were reduced to zero ... due to 2012 production from the project not sustaining economic production rates assumed by McDaniel in its year end 2011 report."
On Monday, Connacher announced Mr. Bloomer as its new chief executive officer, effective April 11, 2013.
Mr. Bloomer did not immediately reply to a call for comment.
Connacher is a struggling oil sands company that has had its own reserves troubles. In February, its reserves fell by 10 per cent, largely thanks to diminished expectations for its oil sands output.
"Given that performance at both of the company's projects (Great Divide and Algar) have been far below expectations, it is not a big surprise that the reserves/resource has been reduced," Jeff Martin, an analyst at Peters & Co., wrote at the time. Mr. Martin's mid-February outlook for Connacher was bleak.
"We believe there is minimal equity value remaining in the company," he wrote. "The company has ~$800-million of net debt and we forecast that it will have zero cash flow from operations over the next two years at current strip commodity prices."
Petrobank, in a statement announcing Mr. Bloomer's coming resignation from its board – also effective April 11 – said it wished him well.
"On behalf of Petrobank, I would like to sincerely thank Chris for his commitment and significant contributions to the advancement and growth of Petrobank," Petrobank chief executive John Wright, said in a statement.
(Nathan VanderKlippe is a Globe and Mail Energy Reporter.)
Return to Streetwise home page.
Nathan VanderKlippe