Total sells a 10% Interest in Northern Lights Oil Sands Project to Sinopec; Two Now Have Joint Ownership
Total E&P Canada Ltd., a wholly-owned subsidiary of Total S.A., has sold a 10% interest in the Northern Lights Partnership (NLP) to SinoCanada Petroleum Corporation (SinoCanada), a subsidiary of China Petroleum & Chemical Corporation (Sinopec).
As a consequence of the transaction, NLP will be jointly owned by Total Canada and SinoCanada, with 50% each. In May 2005, SinoCanada acquired a 40% interest in NLP from Synenco Energy Inc. Total Canada acquired the remaining 60% interest when it purchased Synenco Energy Inc. in 2008. (Earlier post.)
The Northern Lights Oil Sands Project is located approximately 100 kilometers (62 miles) northeast of Fort McMurray, Alberta. A 2008 estimate of contingent resources of the Northern Lights Project published by Synenco was 1.08 billion barrels of bitumen; these resources should be recovered using mining technologies. Total says that it is strongly committed to this project, which is in line with the Group’s strategy of developing non-traditional oil fields to provide long-term production capacities.
Total is also the operator of the Joslyn Lease with a 74% interest, located 65 kilometers (40 miles) northwest of Fort McMurray. The lease will be developed using surface mining technologies. The production potential of the Joslyn lease is currently estimated at more than 200,000 barrels per day.
Total also holds a 50% interest in the Surmont lease, located about 60 kilometers (37 miles) southeast of Fort McMurray, which is being developed using Stream Assisted Gravity Drainage (SAGD) technology. Phase 1, which started end 2007, is currently producing 18,000 barrels per day. It will be followed by Phase 2 which will bring the Surmont production to approximately 110,000 barrels per day. Future phases at Surmont are also under study.
Total also has interest in several oil sands leases at the delineation stage in Athabasca.
In addition, Total has initiated engineering studies of an upgrader in the Edmonton area. Phase 1 of the upgrader should process 150,000 barrels per day of bitumen and could be commissioned before 2015, subject to Joslyn Project planning and ERCB approval (Energy Resources Conservation Board). Phase 2 could increase overall bitumen processing capacity to more than 200,000 barrels per day.
Lastly, on January 28, 2009 Total’s subsidiary, Total E&P Canada Ltd., launched a public offer to acquire all the issued and outstanding shares of the UTS Energy Corporation, a company listed on the Toronto Stock Exchange. UTS is a 20% partner in the Fort Hills oil sands project.
On 27 March, the UTS Board of Directors reiterated its unanimous recommendation that shareholders reject the unsolicited Total bid, which they characterized as financially inadequate.