On June 28, Petro-Canada, on behalf of the Fort Hills Energy L.P., announced their formal design basis for the new Fort Hills Project. Located in Alberta, Fort Hills is an integrated oil sands mining project, which includes a mine and bitumen extraction plant 90 kilometres north of Fort McMurray and an upgrader in Sturgeon County, northeast of Edmonton.
“This milestone marks the partnership’s commitment to proceed with the front-end engineering and design (FEED) stage,” said Petro-Canada spokesperson Chris Dawson. The FEED stage is expected to take about 12 months, after which a definitive cost estimate will be produced. The final “go-ahead” decision on the project will be based upon that cost estimate.
The mine had received regulatory approval from Alberta Environment and the Alberta Energy and Utilities Board in 2002, and the first cut (initial mine site when production begins), has been cleared of trees and vegetation. They’re presently in the process of ditching and draining to remove surface water; office infrastructure, heavy haulers, and some other earth-moving equipment have already been put in place. The next step is to drain and contain the subsurface water and remove the excess soil to reveal the precious bitumen ore.
Thus far, the mine has ordered 25 of the heftiest trucks they could find, and plans on ordering other long-lead equipment over the next year - and let’s just say the order’s a tall one. About $800 million will be spent on heavy equipment for the mine and upgrader sites over the next year; the preliminary capital cost estimate for the first phase of Fort Hills is $14.1 billion. This first phase is expected to produce about 140,000 barrels per day (b/d) of synthetic crude oil, with production from the Sturgeon Upgrader foreseen in the second quarter of 2012. Bitumen production is anticipated at 160,000 b/d and is expected to begin in the fourth quarter of 2011.
The mine site is located in the Athabasca fairway of prime oil sands mining operations, one of the largest of the few remaining undeveloped leases in the area. Dawson said that so far, the surrounding communities have been mostly supportive. Just before achieving mine approval in 2002, the Alberta Energy and Utilities Board held a public hearing in which opinions were voiced and concerns addressed. Most people aren’t putting up much of a fuss about the opening of the Fort Hills mine, especially with all the opportunities it has to offer. About 1,100 new permanent jobs will be created, some of which will have to go to foreign workers, but the mine plans on making good use of all the skills and talent around them, which means the surrounding communities get first pick when it comes to employment. The mine also has formal community partnership agreements with three regional First Nations: Fort McKay, Mikisew Cree, and Athabasca Chipewyan.
Petro-Canada and its Fort Hill partners are committed to responsible development, and so they’ve taken it upon themselves to make promises they can be sure to live up to. The company will relocate fish species desirable to First Nations, ensure wildlife use of river valley habitats isn’t disrupted by setting back the mine, and work with First Nations to ensure that reclamation planning and design meets their needs and expectations. In the Fort McKay First Nations’ case, transportation will be provided to and from the Fort Hills mine site for employees and contractors working there. Petro-Canada provides funds and sponsors the Fort McKay First Nations daycare facility; they also work with their school industry group to identify areas to provide funds for projects such as the science fair, year book, earth education camp, and more. Mikisew Cree and Athabasca Chipewyan First Nations also benefit from the agreement. Funding is provided for the Aboriginal Summer Student Program, and Petro-Canada made sure to sufficiently distance the mine from the Athabasca River Valley wall so as to maintain the river’s stability. It is perhaps still very early into the project, but Dawson said that “throughout the life of the project - and as mandated prior to construction - we’re bound by more than 100 environmental compliance conditions set forth by the Energy and Utilities Board and Alberta Environment.”
We can rest easy knowing the surrounding communities and natural environment are well protected, but what about the workers and their operational environment? Fort Hills has it covered. “Workforce safety is the number one priority at Petro-Canada in all phases of our operations,” said Dawson. The company’s “Zero-Harm” philosophy stems from the belief that almost all injuries are foreseeable and avoidable, both at work and at home. This reflects how Petro-Canada values its workers. To them, occupational illness and injury are unacceptable and are therefore not considered an unavoidable company risk. This philosophy is reinforced by their Total Loss Management (TLM) performance standards. TLM aims to provide a safe and healthy working environment and is also committed to reducing risks to the point where there is “Zero-Harm” to any and all people.
In accordance with “Zero-Harm,” Petro-Canada also identifies workplace hazards and monitors the health of the working environment and individual employees. Ongoing industrial hygiene samplings to measure workplace exposures (and provide solutions to those exposures) are all a part of keeping everything and everyone squeaky clean. All employees who are at risk of exposure to potential health hazards are recommended to undergo individual health assessments. In 2006, the company’s “overall total recordable injury frequency (the number of employees and contractors injured on the job per 100 people - TRIF) decreased to 0.85, breaking the 1.0 barrier and putting them among the best safety performers in their industry. This represents a decrease of 25 per cent compared with 2005.” They plan on continuing to make significant headway. Petro-Canada emphasizes their pledge to safety by regularly participating in safety stand-downs - occasions where senior management visits field sites and facilities, to talk with employees about health and safety issues.
Thus, Petro-Canada reinforces their position on the list of safety leaders.
Fort Hills Energy L.P. consists of Petro-Canada (with a 55 per cent working interest), UTS Energy Corporation (with a 30 per cent working interest), and Teck Cominco Limited (with a 15 per cent working interest), with Petro-Canada Oil Sands Inc., a wholly-owned subsidiary of Petro-Canada, as the contract operator for the project. UTS Energy Corporation was very much involved in the re-establishment of the Fort Hills Oil Sands Project and is the principal founder of the Fort Hills Energy Partnership. When all’s said and done, partners in the project will most likely be grinning from ear to ear. Once the final phase is complete, the project is expected to produce up to 280,000 barrels of synthetic crude oil per day by the year 2015. Once the dust has settled, the Fort Hills Project will be running like a well-oiled machine - a very safe, environmentally savvy, machine.