PROJECT
PHOTO: Connacher Oil and Gas
Recently acquired Luke Energy is a
natural gas producer.
It is a small-company
approach to “what was
perceived as a
big-company game.”
~ Dick Gusella,
Connacher Oil and Gas
rigs, Sametz says. This was particularly evident in March 2004, when
the company was drilling core holes.
“As breakup occurred, rigs [from
the north] had to come down this
highway, and you could almost just
flag them in.”
Great Divide—and Connacher
itself—appears to be all about man-ageability and sustainability. With its
small size, it is not the typical commercial oilsands project of the past.
“In the oilsands world, the rules
are kind of built with the mines in
mind,” Sametz says. “Ten years
ago, our small commercial project
would have been called a pilot.”
The idea of the small-scale operation is to avoid the challenges
associated with building a
megaproject, from labour requirements to modules purchase and the
flexibility to incorporate emerging
technologies.
“We basically want to go to [a
place like] Costco and buy the
10,000-barrel-per-day production
modules. You put them together like
Lego,” Sametz explains. “That’s
where we think the industry is going,
and our peer group sees things the
same way. It’s the old ‘slice the salami into pieces you can work with.’”
It is a small-company approach to
“what was perceived as a big-company game,” Gusella says. Essentially,
it is the Lloydminster approach to
heavy oil—installations of about
2,000 barrels per day—multiplied by
two or three. It could eventually
become a 30,000- to 50,000-barrel-
per-day project, but that would be
done in pieces. Sametz says this also
has to do with recognizing the quality of the reservoir.
“It gives you what it gives you.
Don’t try to make it give you more.”
A smaller-scale project will also
allow the company to adapt more
easily than larger operations to new
technologies, Sametz says, like the
emerging potential to use other
fuels than costly natural gas to generate steam.
“You can burn anything to make
steam,” he says. “We hope some
day to be burning bitumen. If we
can figure out a way to do that, we
will be there. We will be able to take
advantage of those changes nicely.”
Connacher’s strategy is designed
to manage the risks associated with
unconventional oil development.
Between now and 2012, Gusella
says higher oil prices and wider differentials are likely to continue,
combined with sustained pressures
on natural gas prices—the largest
operating cost component of oilsands development. That is why the
company has purchased a small
refinery and a natural gas producer:
physical hedges against substantial
challenges in the near term.
