‘Fort McMoney’ gets helping hand

Alberta government pumps C$396 million into region to ease strains on oil sands capital and boomtown for health care, housing and water treatment; opposition parties favor moratorium or slowdown in growth

Gary Park

For Petroleum News

The price of progress has just cost the Alberta government another C$396 million.

That’s what the government is pumping into health care, affordable housing, water treatment and other services to ease the strains on the oil sands capital and frontier boomtown of Fort McMurray, otherwise known as Fort McMoney.

Premier Ed Stelmach earmarked the money on the same day a government report suggested the health system in northeastern Alberta could “collapse” without an injection of new funds.

The Regional Municipality of Wood Buffalo, which covers the region including Fort McMurray, is growing at the rate of 9 percent a year, having almost doubled in population since 1999 to 80,000. It is now forecast to hit 100,000 by 2012 as the pace of oil sands projects quickens.

A shortage of building land has seen the average cost of a new single-family home top C$500,000, easily leading Alberta, while rents are C$1,600 for a two-bedroom apartment.

“While the entire province is experiencing growth, nowhere are these pressures more evident than in the Fort McMurray region,” said Stelmach.

He said the new funding is “critical to keep Alberta’s economic engine running smoothly and strongly for now and into the future.”

“They also ensure that the oil sands growth continues,” he said.

Opponents: breakneck speed can’t be sustained

They want a freeze or a slowdown on new oil sands projects to give Fort McMurray some breathing room and give the government time to assess the impact of industrial activity on air, water and climate change.

Liberal leader Kevin Taft said the money is not nearly enough to meet the needs.

“The government’s claim that they could not have planned for this boom just doesn’t make sense,” he said. “The projects have been on the books for years. You aren’t going to catch a galloping horse with baby steps.”

The government report by former deputy minister Doug Radke said the province’s traditional budget and planning formula is not designed to handle fast-growing communities.

But Radke was also accused of bypassing environmental problems, notably the rise in greenhouse gas emissions and the impact on the Athabasca River, the region’s main water supply source.

Nexen-OPTI lay out expansion plans

They laid out plans for the next expansion phase at their Long Lake project, which only comes on stream later this year and will reach capacity of 72,000 barrels per day in 2008. To the end of 2006, the partners had spent C$3.8 billion on Long Lake and expect the final costs will be about C$4.6 billion — about 20 percent over budget.

Without waiting, the partners, having boosted their recoverable reserves to 3 billion barrels through drilling and land acquisitions, are now raising their overall production target to 360,000 bpd from the 240,000 bpd scheduled for 2016.

“We’re in a strong position to implement our future growth plans,” said OPTI Chief Executive Officer Syd Dykstra.

He said 180,000 bpd of the increased output will come from the Leismer and Cottonwood leases near the Long Lake operation.

No timetable or budgets are available for the additional phases, although OPTI has estimated its share of the next phases at C$100 million this year on preliminary engineering and design work and C$50 million to drill new production wells.

Formal sanction for the expansion work is targeted for 2008 when cost estimates will be released.

Unlike other thermal oil sands projects that are heavy consumers of natural gas, OPTI has developed a special gasification technology to generate heat and upgrade the synthetic crude into a more valuable product.