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Connacher a step closer to oil sands partner

Connacher a step closer to oil sands partner

Jeff McIntosh/The Canadian Press

Nothing makes Alberta's northern swamps more appealing than regulatory approval to build an oil sands project in the neighbourhood.

Connacher Oil and Gas Ltd. received a routine approval to expand an oil sands project Wednesday. But for Connacher, the nod could be extra helpful in a way that has nothing to do with it producing bitumen – at least not on its own.

Instead, the blessing from Alberta's Energy Resources Conservation Board could better the company's chances of finding a partner – or even a buyer – for its oil sands projects. With regulatory approval already in place, it is one less question mark a potential buyer or investor has to consider.

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The ERCB said Connacher is free to develop its 24,000 barrel per day Great Divide expansion project, the Calgary-based company said in a statement Wednesday. The plan will expand its existing Algar facility, which has the capacity for 10,000 barrels of oil per day.

Connacher is among those negotiating an oil sands development deal with Kuwait Petroleum Corp., sources have told The Globe and Mail. Connacher's Great Divide, Thornbury, and Quigly properties are south of Athabasca Oil Corp.'s Hangingstone project, which Athabasca confirmed is part of its own negotiations with Kuwait. Sources say oil sands companies are packaging together land for Kuwait to invest in. Companies beyond Connacher and Athabasca may be participating in the deal.

Oil sands companies large and small are searching the globe for outside financial support, and state-owned companies have been aggressively pursuing assets. Connacher's Great Divide expansion approval may give it a negotiating edge. And Connacher knows it.

"This approval represents a significant milestone in the future development of the company's substantial reserve base and allows the company to advance its evaluation of the costs, timing and financing alternatives available to pursue this expansion project," the company said in its statement.

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