THE INTERNATIONAL FLAVOUR
OF CANADA’S OILSANDS INDUSTRY
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Western Oil Sands was acquired by Houston, Texas-based
Marathon Oil for $6.7 billion in October 2007. Western was
producing approximately 30,700 barrels of bitumen per day at
the time of the transaction, thanks to its 20 per cent interest
in the Athabasca Oil Sands Project, the third largest oilsands
Fver the last year, we have seen a number of large mine. Net production is expected to increase to over 130,000
multinational oil and natural gas companies enter barrels of bitumen per day by 2020. The acquisition of West-
Canada’s oilsands arena by acquisition or through ern fit Marathon’s strategy of trying to boost processing of
joint ventures with existing oilsands players. The recent rise Canadian heavy crudes in its refineries in the U.S. Midwest
in the price of oil has certainly been one factor, which has and the Gulf Coast. Marathon believes that it can retool its
drawn the attention of these large multinationals to Canada’s refineries to handle Western’s production at less than half the
unconventional oil industry. Another factor in this trend is cost faced by competitors building new upgraders in Alberta.
the processing and refining capability that these large interna-
tional oil companies possess. This is becoming an increasingly
critical factor to the industry because of the increased output 9G
of bitumen being generated.
Husky Energy’s joint venture with British-based BP, announced
in December 2007, was driven both by Husky’s need to increase
processing and refining capacity for its increasing bitumen
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supply, and BP’s desire to re-enter the Canadian oilsands
The largest oilsands deal in 2007 was Royal Dutch Shell’s industry. As part of the joint venture, Husky will provide an
$9.7-billion acquisition of the remaining 22 per cent of interest to BP in its Sunrise oilsands project, and in return BP
Shell Canada that it did not already own. Even though Shell will assign Husky an interest in its Toledo, Ohio, refinery. BP
Canada held a considerable amount of conventional produc- previously held oilsands leases in Canada, which were pur-
tion (approximately 118,000 barrels of oil equivalent in the chased by Canadian Natural Resources in 1999. The lands
fourth quarter of 2006), Shell Canada’s oilsands production once held by BP are now home to Canadian Natural’s Horizon
of approximately 137,000 barrels per day in the same time project, which is set to open later in 2008, and could ultimately
period, and its plans to increase its oilsands production produce250,000barrelsofbitumenperday.
to 770,000 barrels per day is what caught the eye of parent
company Royal Dutch Shell, leading to the buyout of the
remaining minority shareholders.
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The high amount of activity of mergers and acquisitions in
the oilsands sector in 2007 in some ways illustrates the shift
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of oilsands from a potential resource to a reality. The entrance
Norwegian-based StatoilHydro ASA’s takeover of North of companies such as BP, Marathon, and Royal Dutch Shell,
American Oil Sands for $2.2 billion was another signifi- considered by many to be the super-majors, into the oilsands
cant deal done by a large European-based oil and natural industry validates this fact. With production and capital
gas company in 2007. North American Oil Sands operates requirements in the oilsands expected to increase dramati-
about 250,000 acres of oilsands leases in the Athabasca region cally over the next decade, the super-majors are the companies
of Alberta. First production from its Kai Kos Dehseh steam with both the financial capability and the mass infrastructure
assisted gravity drainage (SAGD) project is expected to come (refineries) in place to ensure that this increased oilsands pro-
on stream in late 2009 or early 2010.
duction reaches the consumer.
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