Wednesday, June 13, 2012
By Jay F. Marks, Oklahoman
CONKLIN, Alberta — Gov. Mary Fallin has only been in Canada for a couple of days, but she's already noticed many similarities between her state and the province of Alberta.
Oklahoma and Alberta are home to about the same number of people, with economies stronger than the rest of their countries and a wealth of natural resources, including abundant oil and natural gas reserves, she said.
Fallin, who will speak Wednesday at the Global Petroleum Show in Calgary, spent much of Monday touring Alberta's oil sands. The trip included a visit to Oklahoma City-based Devon Energy Corp.'s Jackfish operation.
She said the trip helped her understand the connection between Oklahoma and Canada, with state companies lending their expertise to the development of a massive resource base in Alberta.
“It all comes back to benefit Oklahoma,” the governor said, pointing to figures from the Alberta government indicating oil sands development will contribute at least $80 million a year to the state's economy through 2035.
Fallin was joined on the oil sands trip by Oklahoma Energy Secretary Mike Ming and several staff members.
Marvin Schneider, Alberta's head of U.S. relations, offered the Oklahoma delegation an overview of the oil sands as the group headed north from Calgary on Monday morning. He said the area of northern Alberta that is home to the oil sands is about 78 percent of the size of Oklahoma.
The oil sands have proved reserves of about 177 billion barrels of oil, but the area ultimately may be able to produce as much as 315 billion barrels of oil as technology develops. Only about 7.5 billion barrels have been produced so far.
Schneider said most companies mine the oil sands in shallow areas or use a process known as steam-assisted gravity drainage to free the oil from the sand in deeper formations.
Mining accounts for 20 percent of the oil sands operations but 55 percent of the production, he said. Most operators, including Devon, use steam to heat the thick oil, known as bitumen, so it can be moved out of the ground.
The bitumen is as thick as peanut butter.
“That stuff, you could leave it there for hours and it wouldn't move,” Devon Canada President Chris Seasons said, placing a jar of bitumen upside down.
Officials said most of Devon's oil sands operations are devoted to water treatment.
“A very small part of the footprint is tied to creating oil,” operations manager Kelly Hansen said. “The bulk of the footprint is tied to recycling, retreating and reheating water so we can get steam.”
Devon produces about 55,000 barrels of oil a day from Jackfish 1 and Jackfish 2, which is still ramping up operations after it began injecting steam last May. Jackfish 3 is under construction, with plans proceeding with joint venture partner BP for several similar operations at nearby Pike.
Schneider said Alberta monitors oil sands operations closely to protect the environment and preserve the region's boreal forests. All areas must be returned to their original condition when operations cease.
“Alberta has a long history — over 70 years — of regulating the oil and gas industry,” he said.
Alberta's regulations were based on rules promulgated by U.S. states, including Oklahoma, Schneider said.
The province's resources play a large part in Canada's oil production, which accounts for a quarter of the oil imported by the United States. Alberta accounts for 15 percent of U.S. imports on its own.
“That amount can increase in the future,” Schneider said.
Most of Alberta's oil goes to the Midwest, but he said increased pipeline capacity, with projects such as TransCanada's Keystone XL pipeline, would add more markets and bolster its economic impact.
Schneider said oil sands development can contribute as much as $15.9 billion a year to the U.S. economy — including $155 million a year to Oklahoma — if there are more avenues to move Alberta's oil to American markets.
Fallin pledged her continued support to the Keystone XL project, which was denied a permit by President Barack Obama's administration this year.
She said the southern portion — expected to begin construction this summer, linking Cushing's oil storage hub to the Gulf Coast — is expected to provide a $1.2 billion boost to the state's economy.
Fallin said the project also will employ about 14,000 people during construction, providing direct and indirect benefits to Oklahoma.
After finishing the oil sands tour, which included a flyover of several mining sites, Fallin said she was looking forward to sharing Oklahoma's contributions to the oil and gas industry at the petroleum forum.
The forum was expected to draw 65,000 people from about 90 countries.
“Oklahoma really is a world leader when it comes to technologies, processes and innovations in the oil and gas industry,” she said. “We have so much to offer as a state.”
Fallin said Canada is Oklahoma's No. 1 international trade partner, with 53 Canadian companies doing businesses in the state. They employ more than 3,000 people.
About 36 Oklahoma companies have operations in Alberta, she said, including equipment manufacturer Kimray Inc. and the Williams Cos. Inc., which has invested more than $1 billion in the province.
“There is so much business interaction between Alberta and the state of Oklahoma,” Fallin said. “Hopefully we'll be able to bring even more business from Oklahoma companies up to Canada.”