The growth of Oil Sands in Alberta is being carefully monitored by the UKTI British Trade Office in Calgary led by Paul Paynter and by UKTI's Sector Group Oil & Gas and Mining Teams based in Glasgow.

Contact us and find out how we can help you.

Testimonials from UK Companies

One UK company that the British Trade Office in Calgary helped set up in Canada is R&A Energy Limited, working on ultrasonics in combination with organic friendly diluents to create heavy oil mobility. President & CEO Richard Selwa said : "They pointed us in the direction of a whole bunch of people to help us set up. We couldn’t have done that much without them".

Another is Oilflow Solutions, who offer a unique polymer-based technology to convert low-mobility heavy oil to free-flowing low viscosity dispersions. Speaking of the British Trade Office, CEO Mike Crabtree said: "They really have been stars for us. They were instrumental in providing us general guidance and specific support".

For those other UK companies that are able to establish themselves in Canada soon - and prepared to demonstrate the necessary and sustained commitment to this marketplace over more than just the short term - the Oil Sands offer excellent opportunities to develop new and sustainable revenue streams.

What is Oil Sands?

Oil sands are deposits of bitumen, a heavy black viscous oil that must be rigorously treated to convert it into an upgraded crude oil before it can be used by refineries to produce gasoline and diesel fuels. Bitumen is best described as a thick, sticky form of crude oil, so heavy and viscous that it will not flow unless heated or diluted with lighter hydrocarbons.

Oil sands are substantially heavier than other crude oils. Technically speaking, bitumen is a tar-like mixture of petroleum hydrocarbons with a density greater than 960 kilograms per cubic metre; light crude oil, by comparison, has a density as low as 793 kilograms per cubic metre. Compared to conventional crude oil, bitumen requires some additional upgrading before it can be refined. It also requires dilution with lighter hydrocarbons to make it transportable by pipelines.

While conventional crude oil flows naturally or is pumped from the ground, oil sands must be mined or recovered in situ. Oil sands recovery processes include extraction and separation systems to remove the bitumen from sand and water. About two tonnes of oil sands must be dug up, moved and processed to produce one barrel of oil. Roughly 75 per cent of the bitumen can be recovered from sand; processed sand has to be returned to the pit and the site reclaimed. In situ recovery is used for bitumen deposits buried too deeply - more than 75 metres - for mining to be practical. Most in situ bitumen and heavy oil production comes from deposits buried more than 400 metres below the surface of the earth.

Why are the Oil Sands so Important?

Despite the credit crunch new capital expenditure in the sector is expected to surpass CDN$140-$200 billion (£94-125 billion) over the next ten years with the majority being spent in Alberta on oil sands projects. There are 174 billion barrels of proven oilsands reserves in Canada. Continuing opportunities exist for UK companies to deliver the innovations and cost efficiencies needed to mine and transport the vast but glutinous deposits of bitumen that underpins the Albertan and increasingly the Canadian economies; and to do that in an environmentally sustainable and sensitive way.

In July 2009 The Government of Alberta announced three winning projects that will receive CDN $2 billion in carbon capture and storage funding, with obvious potential benefits for UK companies who can provide relevant expertise.

On June 5th 2009 Greg Stringham, the Canadian Association of Petroleum Producers Vice President for Markets and Oil Sands said: “CAPP’s Production Forecast indicates that even with delays due to current economic circumstances, oil sands production is expected to grow….Producers expect continued demand for the security of supply that crude oil from Canada provides to the North American energy market.” There are no comparable reserves of this size in a stable country close to the huge market that is the US. It is unlikely too that the US will be able to quickly replace the 2.2 million barrels of oil per day that already flow south from Canada (over 20% of US total imports), although Albertan companies do also have plans to build new pipelines to the Pacific coast to access new markets in the Far East.

Most oil sands projects are very major investments amortised over 15-20 years, so short-term price fluctuations have less impact on oilsands mining. Most major players – Suncor, Syncrude, Shell, Imperial/Esso, Husky, Nexen, Total etc. – and EPC companies such as AMEC - are committed over the long haul. Allied to a familiar business culture and language within a stable financial environment, there are excellent opportunities for more UK companies to join those that have already succeeded in this marketplace.

Mining at Oil Sands

Canada is one of the largest mining nations in the world, producing more than 60 minerals and metals. Exploration investment has surpassed C$1 billion for five straight years; eight year upward trend. Investment is expected to increase due to high commodity prices and rising consumption levels.

Opportunities exist for:

• Materials handling companies, e.g. manufacturers of large machinery (trucks and shovels) and supporting equipment - crushers, rollers, conveyor belts, etc.

• Service companies - can provide maintenance and service personnel (e.g. freelance, etc) and ideas – are in demand.

• New people, new bodies, new ideas – technology and innovation – especially in the environmental arena.

• Two mining projects – Horizon and Jack Pine – are under construction and four are proposed – Kearl, Fort Hills, Voyageur South and Northern Lights.

• About 30% of mine costs are related to equipment.

• Oil sands upgrading opportunities – 4 project expansions and 10 proposed projects in the Edmonton Upgrader Alley area – relating to global opportunities for suppliers of heat exchangers, pressure vessels, pumps & compressors, valves and structural steel.

• Construction Equipment - Construction investment is expected to increase to 2012 with the non-residential sector leading the way. Engineering, industrial, institutional and government construction (hospitals, schools) also posting gains. In Alberta, over C$255 billion in capital projects are under construction or proposed to start within two years.

Key Facts About Oil Sands

• Alberta’s oil sands comprise one of the world’s largest 2 sources of bitumen; the other is in Venezuela

• Alberta’s oil sands cover an area larger than the state of Florida

• The oils sands is home to the biggest truck in the world: three stories high it cost Cdn$5million - it operates 24 hours a day, 365 days a year

• Oil sands are recoverable two ways: the first 75 metres by surface mining or open-pit technology and lower deposits by in-situ methods such as Steam Assisted Gravity Drainage (SAGD) and Cyclic Steam Stimulation (CSS)

• The first usage of the bitumen from the Alberta oil sands was by the Cree and Dene aboriginal peoples to waterproof their canoes thousands of years ago

• In 2006, Alberta’s oil sands were the source of 47% of all crude oil and equivalent produced in Canada

• Alberta’s oil sands are a mix of 10-12% bitumen, 80-85% mineral matter (clays and sand) and 4-6% water

Contacts

For more assistance in entering this lucrative market please contact:

Paul Paynter

Director, UKTI Calgary

Tel: +001 403 539 2246

Email: paul@btoalberta.com

Jim Feeney

Head of Americas, Europe and FSO Unit

UKTI Energy Team

Tel: +44 (0)141 228 3690

Email: jim.feeney@ukti.gsi.gov.uk

Ian Lockhart

UKTI Advanced Engineering Team

Tel: +44 (0)141 228 3654

Email: jim.feeney@ukti.gsi.gov.uk