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Green light on Surmont expansion may come this year

The Surmont oil sands project in Alberta, co-owned by Total and ConocoPhillips

Nathan VanderKlippe

A decision to build another major oil sands project could come as soon as this year, the newest chief executive officer in Canada's oil patch said Monday.

Sanctioning of a 90,000 barrel-per-day addition to the Surmont project, which is 50-50 owned by Total E&P Canada Ltd. and ConocoPhillips Co. "would be a major additional step," said Jean-Michel Gires, who took the reins at Total SA's Canadian operations six weeks ago.

Surmont is an in situ project, which uses underground injections of steam rather than mining to extract oil sands bitumen. It currently produces about 20,000 barrels per day in a first phase of operations.

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A decision on whether to build the second, 90,000-barrel phase, will come at the end of 2009 or beginning of 2010, Mr. Gires said in an interview.

A decision to build that phase would come as another major boost to the oil sands, which are riding a tide of rising optimism.

First, Imperial Oil Ltd. decided to build its $8-billion Kearl mine earlier this year. Then last week, EnCana Corp. announced plans to apply for regulatory approval of its Narrows Lake project, which could bring on stream additional production of 80,000 to 120,000 barrels.

Narrows Lake is noteworthy in part because EnCana believes it will be the first major application of a new technology that adds solvents like butane into its underground steam injections. That technology is designed to make a substantial savings in both operating costs and greenhouse gas emissions.

Surmont's second phase will not, however, use that technology, Mr. Gires said. Technological advances will be considered for subsequent phases, he said.

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About the Author
Asia Bureau Chief

Nathan VanderKlippe is the Asia correspondent for The Globe and Mail. He was previously a print and television correspondent in Western Canada based in Calgary, Vancouver and Yellowknife, where he covered the energy industry, aboriginal issues and Canada’s north.He is the recipient of a National Magazine Award and a Best in Business award from the Society of American Business Editors and Writers. More

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