Calgary — Sinopec Corp., the giant Chinese energy company, is eyeing a major investment in Alberta's oil sands — perhaps even its own project — as it pushes to secure supplies for its booming home market.
That push comes even as the United States increasingly looks to the oil sands as a secure source of supply for its own uses, with terrorism and other geopolitical upheaval threatening conventional oil production overseas.
Alberta Premier Ralph Klein said officials with Sinopec, which is majority-owned by the government of China but trades as a public company, have toured the oil sands since his own June trip to Beijing. “I met with them in Beijing and true to their word they came over to examine the potential of investing in the tar sands. We encourage their investment,” Mr. Klein said in comments to reporters at the end of the Banff Global Business Forum.
That investment could run into the billions if, as Mr. Klein said is a possibility, the Chinese company opts to set up a standalone venture. “What they're talking about is either joint-venturing with an existing oil sands developer or acquiring a new lease.”
Sinopec could not be reached for comment.
At the same time, Canadian Oil Sands Trust is continuing to talk to another Chinese state firm, PetroChina, about a long-term agreement to buy synthetic crude from the Syncrude joint venture in which the trust is the largest shareholder. Spokeswoman Siren Fisekci said no agreement has been struck, but noted her firm plans to send trial shipments of its synthetic crude to PetroChina so it can gauge its refineries' abilities to process the oil.
Large-scale projects to mine bitumen from the oil sands and process it into synthetic crude are multibillion-dollar investments; smaller operations using subterranean steam to melt bitumen and pump it to the surface are less costly, but still run into the hundreds of millions.
International investor interest in the oil sands has been surging lately, driven by the U.S. Department of Energy's decision to boost its official number for the reserves of bitumen in northern Alberta, said Wilf Gobert, vice-chairman of Peters & Co. Ltd. in Calgary. Total SA of France, for instance, bought a 43.5-per-cent stake in an oil sands project in January, 2003.
But Sinopec's interest appears to be much more than merely financially driven. Mr. Klein said the Chinese company has discussed shipping production from the oil sands to British Columbia by pipeline, and across the Pacific by tanker to its home market.
“They're talking about taking bitumen and bringing it down to synthetic crude and perhaps using the Enbridge proposal to pipeline that to Prince Rupert and send it to China.”
The proposal by Enbridge Inc. to build a pipeline to Prince Rupert is one of a competing number of possible projects to broaden the distribution of bitumen and synthetic crude from the oil sands.
Enbridge's plans call for a pipeline with a capacity of 400,000 barrels a day to begin transporting oil as early as late 2009. However, the company is still looking to secure long-term shipping commitments that will allow it to go ahead with the project.
Mr. Gobert said two logical partners for Sinopec would be Synenco Energy Inc. and UTS Energy Corp., both of which are looking for capital.
UTS president Will Roach said he would not comment on details of any talks in which his company might be engaged, but agreed that UTS's mining project would be a logical fit for Sinopec. “I imagine we would be a candidate they'd like to talk to,” he said.
Synenco could not be reached for comment.
Bob Dunbar, senior director of research at the Canadian Energy Research Institute, said he believes more foreign involvement in the oil sands is a near certainty, noting that he recently presented information on the sector to a number of European multinationals.
© The Globe and Mail
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