US energy chief Bodman to visit Alberta oil sands next week

US energy chief Bodman to visit Alberta oil sands next week

Vancouver (Platts)--6Jul2006

US Energy Secretary Samuel Bodman is scheduled to get a first hand
look at the Alberta oil sands next week at a time when operators are
struggling to control costs that have set off alarm bells for a planned
expansion of Shell Canada's Athabasca project.

News of Bodman's planned visit comes a week after Alberta Premier Ralph
Klein told US Vice President Dick Cheney in a White House meeting that it
would be wise to visit the oil sands to demonstrate the importance of the
resource as a secure energy supply.

Jerry Bellikka, a spokesman for Alberta Energy Minister Greg Melchin,
told Platts Thursday that Bodman is expected to visit the oil sands area on
July 12-13 prior to participating in a July 14 roundtable in Calgary with CEOs
from several producing companies, as well as meet with Klein.

His arrival coincides with dislosures late Wednesday by Shell Canada and
Western Oil Sands, one of its partners in the Athabasca project, of looming
cost overruns associated with completing the planned three-phase expansion of
the project to 500,000 b/d from the current 150,000 b/d.

Western said costs could overrun the initial budget forecast of C$13.5
billion ($12.2 billion) by 50%. Shell Canada is operator of Athabasca with a
60% stake, with Western Oil Sands and Chevron Canada each holding 20%.

A final decision on proceeding with the planned expansion is expected by
the end of the fourth quarter, Shell Canada said Wednesday.

The pace of planned oil sands expansion projects is already racing far
ahead of the domestic labor pool, prompting the Canadian government to predict
that up to 10,000 foreign workers might be imported over the next two years.

Athabasca's cost troubles are occuring amid a clamor on the political
front in Alberta and among environmental organizations to halt or slow the
pace of development.

One former Alberta premier, Peter Lougheed, who oversaw the pioneering
projects in the 1970s, said last month it is time to rethink the pace of
expansion projects, which are now forecast to total more than C$100 billion
over the next decade.

And Brian Mason, leader of the New Democratic Party, said on Wednesday
that a commission should be created to study all aspects of oil sands
development. He said the Alberta government urgently needs a "long-term
development strategy" that puts equal emphasis on prosperity and the
environment.

The Oil Sands Environmental Coalition, led by the Alberta-based Pembina
Institute for Appropriate Development, is making its concerns known at an
Alberta Energy and Utilities Board hearing which started hearing an expansion
application by Suncor Energy on Wednesday. The coalition plans to argue that
the oil sands are a major source of greenhouse gas emissions and destroy the
boreal forest in northern Alberta.

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