Buyout of oil company to affect the oilsands
A major takeover of Petro-Canada was announced by Suncor today. Petro-Canada might be seen as the “older” method of trying to extract oil, thorugh conventional pumping, while Suncor relies entirely on oilsands and natural gas production exclusively in Alberta.
This is a major step for Suncor being able to expand and diversify its business, but it also going to allow it to acquire access to the Fort Hills project roughly 100 km north of Fort McMurray, Alberta. The project, a 50 km2 area of wilderness, was scheduled to begin production approximately 2014 but a recent drop in fuel prices caused a halt in construction. Even a fourth quarter loss for Petro-Canada did not help efforts much. Suncor has the advantage of having already developed a method for mining and refining oilsands, where Petro-Canada is a rookie, having founded Petro-Canada Oil Sands Inc. (PCOSI) specifically to tackle the Fort Hills Project. Estimated to produce roughly 350,000 barrels a day, it would be a major production site for synthetic crude oil.
My guess was that Petro-Canada was betting on $100 a barrel for oil straight on through, and this downturn in oil prices might ironically make North Americans more dependent on foreign oil production. Without the profitability of developing new sources of energy (oil sands, oil shales, coal gasification) that require a large development and technology startup cost.
The merger is still not going to make Suncor a dominant oil company in the North American market, although fifth largest is nothing to sneeze at. What this will do is likely make oil development in the Athabasca oil sands go much smoother and faster.
March 23rd, 2009 at 10:31 am
I thought a foreign entity couldn’t own more than 20% of Petrocan?
March 23rd, 2009 at 11:17 am
Suncor is all-Canadian. They operate exclusive oil production right in Alberta.
March 23rd, 2009 at 12:44 pm
I remember the adds from the heyday of trudeaupia flying over the refineries and saying I owned petro-Canada! Aint it great!!!!
Send the cheque for my company you Chavez jerkoffs!