Alberta Oilsands’ African investments may prove to be even more profitable
Alberta Oilsands (‘AOS’, TSXV: AOS) is a Calgary based energy company with domestic and international oil exploration prospects. In Canada, AOS is exploring the Athabasca oil sands of northeastern Alberta; internationally, it is becoming increasingly involved in onshore and offshore oil projects in the African rift basin.
In Alberta, AOS has invested some CAD$ 60 million since 2007 to develop a 500 million barrel oil sands resource, using a small fraction of its acreage, which has reached the final stages of development. It is expected to receive commercial production permits from the Government of Alberta around the third or fourth quarter 2013. AOS specializes in smaller ‘in situ’ projects using solvent co-injection steam-assisted gravity drainage (SLP-SAGD). SAGD process has facilitated the commercial development of horizontal CSS and many SAGD projects. Emerging recovery technologies are also developing in order to reduce the capital costs, operating costs and environmental impact. AOS’s main interest is in the Clearwater Project, just south of Fort McMurray, which is at an advanced stage of development. Clearwater, divided in six sections, will produce bitumen using solvent steam coinjection using six well pairs.
AOS has already completed drilling of 60 core holes throughout the area and GLJ Petroleum Consultants has estimated resources at some 373 million barrels. The initial production target is 4,350 barrels a day (bpd) and AOS. Regulatory details for the approval process are being discussed with the Energy Resources Conservation Board (ERCB) and Alberta Environment and the final construction plan is should be unveiled before the end of 2013. AOS has recently entered a CAD$ 2 million farmout agreement with Crescendo Resources Ltd. (related to Canshale Corp.) to develop the latter’s Algar Lake oil sands project in Alberta. The Canadian Association of Petroleum Producers (CAPP) estimates that crude oil production in Canada will more than double in the coming years, especially with the increase of oil from tar sands and shale. The oil sands reflect Canada’s ability to meet growing domestic and global demand for oil. While ‘traditional’ crude oil production is also increasing, oil sands resources are being developed faster. Indeed, new techniques such as the SLP-SAGD being used by AOS have made it possible to recover oil from wells that were previously considered unprofitable and in an environmentally safe manner.
AOS has also accumulated 21 million acres of African rift basin onshore and offshore oil developments in areas adjacent to such oil majors as Total, Tullow, HRT, Beach Energy and NAMCOR. Oil exploration in Sub-Saharan Africa has increased significantly in the past few years, and the political uncertainties of North Africa have only served to accelerate this process. Moreover, Algeria, Nigeria and Libya have been producing less oil and gas than their significant deposits would suggest. AOS is also evaluating engaging in additional exploration in Chad, Ethiopia, Niger and Burundi, as well as offshore acreage in the Republic of Congo, Angola and Gabon. More and more oil companies want to tap into the oil and gas deposits in the East of the African continent, where energy companies are palying out the next round in the race for oil, which still is the main lubricant for the world economy. Tullow Oil has discovered oil off the coast of Kenya; several companies have found oil and gas off the coast of Mozambique; indeed, the U.S. Geological Survey estimates 253.000 billion cubic feet of gas reserves off the coast of East Africa – by comparison, Nigeria, Subsaharan Africa’s largest energy producer makes 186,000 billion cubic feet.
Oil companies can benefit from the oil boom in Africa and the valuations of some of the oil exploration companies involved in African projects have risen over the past few years. This is because, despite the huge potential, oil and gas projects in these African lands are at the very beginning of the oil and gas exploration and the trend can only progress upward. Africa is also the continent with the highest economic growth potential in the next decade and many countries such as Ethiopia or Niger, which have to import oil could soon become exporters. As for the risks, it is worthwhile noting that such companies as Tullow oil, have been involved in Africa for over 25 years and the company is intent on increasing its engagement in the continent. As valuable as the Canadian oil sands may be for AOS, its African investments may prove to be even more profitable.
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