November 2007 Issue
DOING BUSINESS
Premier Stelmach Opts for Royalty Increase Smaller than Review Panel Recommends
BY NORDAHL FLAKSTAD
Freelance Writer
The waiting is over for the Alberta Government’s decision on royalties. Premier Ed Stelmach announced a new royalty regime, Oct. 25, which would see an estimated $1.4 billion more go to provincial coffers beginning in 2009.
Oilsands companies will see their rate go up as high as nine per cent at startup and 40 per cent after startup costs are recovered, along a sliding scale attached to oil prices. Natural gas rates will range up to 50 per cent.
The announcement follows the release of findings by the Royal Review Panel, headed by former forestry executive Bill Hunter, which said an out-of-date royalty regime has short-changed Alberta’s public coffers by billions of dollars. If the government had followed the panel’s recommendations, royalty rates would have brought in about a half a billion dollars a year more than the plan Mr. Stelmach ended up announcing does.
The panel’s claims and recommendations prompted widespread counter arguments from the petroleum industry. Even though Mr. Stelmach didn’t go as far as the panel recommended, his announcement wasn’t greeted kindly within the industry either. Opposition parties, meanwhile, maintained that the provincial government did not go far enough.
Earlier, Alberta Auditor General Fred Dunn added his voice to claims that the province is falling short in collecting oil and gas revenues. Mr. Dunn’s 2006-07 report says that in the face of increased oil and gas prices, the province could have obtained $1 billion or more a year by acting on suggestions by mid-level government officials to change royalty structures. These changes could have been implemented without significantly damaging industry profitability, the report suggests.
Power Link Review
Gives New Currency
To Earlier Proposals
A decision by the Alberta Energy and Utilities Board to reopen the application process for an Edmonton-Calgary electrical transmission line has caused an earlier routing proposed by ATCO Electric Ltd. to be dusted off.
The EUB set aside the hearing process of an application by AltaLink Management Ltd. to construct and operate a 500-kilovolt electric transmission line west of the Queen Elizabeth II Highway. The board opted for new hearings after its earlier review of the line was plagued by assertions that the board used improper investigative and security methods, targeting groups and individuals opposed to the line.
ATCO is again offering to erect the line along a route passing though a less-populated area east of the highway.
Meanwhile, the EUB has named a new three-member panel to review the power line in its entirety — including technical and safety issues, and whether the line is needed at all.
Infrastructure Deficit Grows, Auditor General Warns
The annual report of Alberta’s Auditor General warns of a widening provincial infrastructure deficit, now placed at $6.1 billion.
“Public safety and effective program delivery may be at risk,” says the report.
The report notes that over the next five years the percentage of Alberta roads labelled poor is expected to rise to 23 from today’s 14. Meanwhile, the level of deferred road maintenance over that period is expected to rise to $3.8 billion from $1.7 billion.
Deferred school maintenance requirements amount to $3.8 billion.
Fort Hills Reaches Water Use Agreement
Fort Hills Energy LP is looking seriously at using treated wastewater for its industrial processes at a planned new upgrader. The company has entered into a memorandum of understanding for the plan with Sturgeon County and the Alberta Capital Region Wastewater Commission.
The Fort Hills Sturgeon Upgrader will be located 40 km northeast of Edmonton. Beginning in 2012, it will process bitumen from Fort Hills’ oilsands mine near Fort McMurray.
“Instead of taking fresh water from the North Saskatchewan River for the Sturgeon upgrader, we plan to use recycled water,” said Neil Camarta, P.Eng., senior vice-president of oilsands at Petro-Canada.
This project expands on experience gained from a project at the Gold Bar Wastewater Treatment Facility, where Petro-Canada, the City of Edmonton and Strathcona County provide treated wastewater to Petro-Canada’s Edmonton Refinery.
Fort Hills Energy is a limited partnership of Petro-Canada, Teck Cominco Ltd. and UTS Energy Corp.
Well Cleanups Slow Down
Alberta Environment reports that the cleanup of contaminated oil and gas well sites in the province is proceeding at a slower-than-anticipated pace.
The provincial government started in 2003 to allow private consultants to inspect and certify abandoned wells for producers. It had expected 3,000 clean-up certificate applications last year. In fact, the number of applications was half that.
Some 227,000 Alberta wells will need reclamation at some point.
Several causes have been mentioned for slow progress. They include the scarcity, until recently, of rigs, and personnel shortages.
Suncor Buys Into Gasification Firm
Suncor Energy Inc. has invested in GreatPoint Energy Inc., whose gasification process could enable Suncor to convert petroleum coke from its oilsands operations into clean natural gas — while also sequestering carbon dioxide.
Based in Cambridge, Mass., GreatPoint Energy is building a demonstration plant for the manufacture of synthetic natural gas, after raising $100 million US from several major investors, including Suncor.
Three Groups Qualify to Bid On North Edmonton Ring Road
Following the release of a request for qualifications in July, Alberta Infrastructure and Transportation has asked three groups to submit proposals to develop the North Edmonton Ring Road as a public-private partnership.
The consortiums of financing, construction, design and maintenance companies are
• North Edmonton Road Consortium, led by Acciona SA/SNC Lavalin
Inc.
• Northwest Connect, led by Bilfinger Berger BOT Inc.
• Plenary Roads Edmonton, led by Plenary Group (Canada) Ltd.
The successful proponent is to be chosen by August 2008. Construction should begin in early fall 2008, with completion slated for fall 2011.
The project will extend from Anthony Henday Drive at Yellowhead Trail on the west side of Edmonton to the Manning Drive Freeway.
TransCanada, Sask. Team Up On Polygeneration Plant
The Government of Saskatchewan and TransCanada Corp. will each
provide up to $26 million for the engineering design of a proposed polygeneration
plant near Belle Plaine, Sask. The plant, the first of its kind in Canada, would
be owned and operated by TransCanada and could cost up to $4 billion.
The facility would use petroleum coke as feedstock to produce hydrogen, nitrogen,
steam and carbon dioxide for fertilizer production and enhanced oil recovery,
and to generate about 300 MW of electricity.
Initially, the Government of Saskatchewan will provide up to $6 million for continued engineering design, which matches the $6 million TransCanada has spent over the past two years.
ENMAX Opens Taber Wind Farm
ENMAX Corp. has opened its Taber Wind Farm, developed by ENMAX Green Power Inc. at a cost of nearly $140 million. The 37 Enercon turbines southeast of the town have a total generation output of 80 MW.
Edmonton Airport Spreads Wings — Again
Edmonton Regional Airport Authority will spend $1 billion on expansion at Edmonton International Airport over the next five years. The plans call for a new concourse, added parking, more retail space and 13 new walkways to aircraft.
Barrick Prize Has Silver Lining
There’s silver in them thar Argentine hills and Barrick Gold Corp. is looking
for some help to get at it. Here’s the kicker: the company is willing to
pay big-time money for the right scheme.
The Toronto-based mining company has unveiled a plan to find a practical way of releasing some 180 million ounces of silver at its Veladero, Argentina, gold mine. Creator of the winning proposal will receive $10 million US. The silver is encased in hard silica and the company’s current processes recover only 6.7 per cent of it.
Voice at Work On North West Upgrader
Voice Construction Ltd. of Edmonton has begun breaking ground for the $4-billion North West Upgrader, 50 km northwest of Edmonton near Redwater. The work launches three years of construction before a production start-up in 2011.
North West Upgrading Inc. hopes to raise more than $2 billion by selling a stake in the project, which has an estimated cost of $4.2 billion.
Institute for Nanotechnology Opens Innovation Centre
The National Institute for Nanotechnology of the National Research Council has opened its NINT Innovation Centre at the University of Alberta.
The centre rents space to start-up and existing companies or to industrial collaborators, which will benefit from being close to a high concentration of nanotechnology expertise. It consists of 15 rental units of combined office and laboratory space.
New Environmental Framework Put to Test in Industrial Heartland
The Industrial Heartland is a 317-square-kilometre region northeast of Edmonton that’s already home to many large plants. And it’s slated to contain up to eight more upgraders.
That makes it perfect for Alberta Environment’s new cumulative effects management framework, the government has decided. Under the new approach, the Industrial Heartland becomes the first locale where air emission targets, land protection and watershed management will all be carried out within a regional framework, rather than project by project.
Meanwhile, information released by Bill Donahue, an independent water researcher, predicts that the eight new upgraders in the region would use about 104 billion litres of water a year, or about as much as Edmonton and area consume in a year.
Stantec American Roster
Grows By Three
Edmonton-based Stantec has further expanded its American presence
by buying three firms.
Among them is Woodlot Alternatives, a 65-person consulting firm in Maine specializing
in natural resource assessment, permitting and environmental engineering. Woodlot
also has offices in Massachusetts and Vermont.
Stantec has also acquired Chong Partners Architecture, Inc., one of San Francisco’s largest architecture firms. Specializing in architecture, interior design and planning, the company has about 175 employees and additional offices in Sacramento and San Diego.
Trico Engineering Consultants Inc. of North Charleston, S.C., has also joined the company. This acquisition adds 130 employees and specializes in civil engineering, surveying, landscape architecture and planning.
Swedish Firm Buys NovAtel
Sweden’s Hexagon AB has bought NovAtel Inc., a Calgary-based provider of precision global navigation satellite system components and subsystems. Hexagon, the world’s largest maker of survey equipment, is in active-acquisition-mode. The Swedish company is paying $390 million for NovAtel — its 15th acquisition this year.
Province Takes New Look At Federal Building Retrofit
Alberta Infrastructure and Transportation has contracted Manasc Isaac Architects Ltd. to work on a possible retrofit of the Federal Building in Edmonton. The company will identify development options, as well as technical alternatives for retrofitting the building with modern mechanical and electrical systems. The consultant has also been asked to develop options for underground parking and a landscaped plaza between the Federal Building and the Bowker Building.
In the future, some this work will be integrated into an overall development plan, which will examine alternative uses for the nearby Legislature Annex and Terrace Building sites.
Previous attempts in 1993 and 2000 to redevelop the Federal Building failed because the successful bidders were unable to make the project financially viable without government participation. Vacant since 1989, the signature building was purchased by the Alberta Government in 1983 in a three-way land deal with the City of Edmonton and the Government of Canada.
EPCOR Taps Into Wetaskiwin Water
EPCOR has signed an agreement with Wetaskiwin to design, build and finance upgrades worth $11.5 million to the city’s water treatment plant. It will also operate and maintain the plant.
NEB Forecasts Drop In Gas Production
Deliverability of Canadian natural gas will decline by seven to 15 per cent during 2007-2009, says a National Energy Board report called Short-term Canadian Natural Gas Deliverability 2007-2009. The report says gas deliverability will decrease from 483 million cubic metres per day at the end of 2006, to a range between 410 and 449 million cubic metres per day in 2009.
The report notes that in mid-2006, drilling slowed down in the Western Canada Sedimentary Basin for several reasons, notably continued high costs of labour and other inputs, the increasing value of the Canadian dollar, and stable, moderate natural gas prices. Competing investment in oil and oilsands also contributed.
Alberta and GE Partner for Research
The Alberta Government and GE Water & Process Technologies — an arm of General Electric — plan to work together on solutions in water-related areas, such as mitigating pipeline corrosion. A memorandum of understanding between the two creates a foundation for researchers, scientists and businesses to work together in water-related research and development.
Areas to be covered include oilsands technologies, water and energy management, gasification, biofuels and greenhouse gas emissions, nanotechnology and health-care technologies.
Major Condo Project
Rolled Out in Edmonton
Carma Developers Ltd. has unveiled details, including models, of the Aurora condominium project in downtown Edmonton. The initial phase calls for construction of 246 units, as part of a four-phase development forecast to eventually cost $600-million-plus.
BACKGROUND
STORIES
About the Barrick Prize
www.unlockthevalue.com
About Wellsite Cleanup
www.apegga.org
The PEGG Online, October 2006
About the Taber Wind Farm
www.apegga.org
The PEGG Online, March 2007