OILSANDS EXPERT

OILSANDS EXPERT - BUSINESS AND TECHNICAL ADVISORS TO THE OIL SANDS


WE HAVE ACHIEVED AN OUTSTANDING TRACK RECORD OF PROFITABLE INNOVATION IN THE OIL SANDS. 

HERE ARE SOME OF OUR MOST SUCCESSFUL INITIATIVES FOR THE CANADIAN OILSANDS INDUSTRY.

CANADA IS THE 6th LARGEST OIL PRODUCER IN THE WORLD, AND THE LARGEST SUPPLIER OF OIL TO THE USA.

HOW DID WE GET HERE?

This outstanding Canadian success story is primarily due to the rise of the Alberta oilsands.

However, it was not always so. The Alberta oilsands industry struggled in the 1980's and early 1990's. Then, a few key initiatives were implemented that revitalized the oilsands industry. These initiatives were originally conceived, developed and proposed by a handful of foresighted people. I was one of them.

What did I initiate or co-initiate?

  • A Strategic Vision that the Alberta Oilsands could become the primary economic engine of Alberta, and many of the key initiatives that achieved that goal, including:

  • New Crown Royalty Terms for the oilsands, implemented in 1997

  • New Corporate Income Tax Terms for the oilsands, implemented in 1997

  • A 50% low-cost production increase at Syncrude Canada Ltd. that reduced unit operating cost by 30%

  • The acquisition of new oilsands leases for Syncrude that enabled major expansion of production

  • Technical innovations that reduced costs.

Success in the Canadian Oilsands

From 1984 to 1991 I held several oilsands positions at Canadian Occidental Petroleum Ltd. (now Nexen), and became Manager of Oilsands in the late 1980's, responsible for the Syncrude, OSLO and PCEJ oilsands projects. Syncrude Canada Ltd. is the world’s largest oilsands producer and upgrader.

Syncrude operated with the assistance of several Owners Committees, with Chairmen elected by representatives of the eight owner companies. I was elected Chairman of the Syncrude Technical Committee, Mining Committee, SCO Quality Task and was a member of the Shippers Committee and the Management Committee. The President of Syncrude reports to the Management Committee.

I was also a member of the Fiscal Terms Task Force, which I initiated with a proposal that I presented at the December 1988 Management Committee meeting. This Fiscal Terms Task Force and its successor Oilsands Task Force achieved our objectives, and new Crown Royalty and Income Tax terms were achieved for the Alberta oilsands in 1997.

The new Tax and Royalty terms that we initiated were the primary catalysts that revitalized the Alberta oilsands industry. In the fifteen years from 1996 to 2011, Canadian light crude production decreased by almost 10%, heavy oil and condensate production each decreased by almost 20%, and oilsands production increased by almost 400%

Because of the outstanding success of the Alberta oilsands, Canada is now the 6th largest oil producer in the world and the largest foreign supplier of oil to the USA.

The Corporate Income Tax component of the 1997 Oilsands Fiscal Terms was called the Accelerated Capital Cost Allowance (“ACCA”, or Class 41). Class 41 ACCA was derived from Class 28, which I co-initiated with a colleague, by submitting a proposal to the Syncrude Management Committee in March 1985. We successfully obtained Class 28, with its 100% CCA rate, for a $1.2 billion expansion constructed from 1983 through 1988. Class 41 replaced Class 28 and extended the tax terms to include both mining and in-situ projects. 

In 1985, I co-initiated (with colleagues from Esso and Gulf) a proposal entitled "Opportunities for Additional Production". The post-expansion project design basis was 50.4 million barrels (MMBbl) per year of Synthetic Crude Oil, but we correctly predicted that Syncrude could achieve more than 70 MMBbl of upgraded SCO per year, provided we addressed an imminent bitumen shortfall. Syncrude accepted our proposal and achieved our new production objectives, with minimal added costs. As a result of this increased production, Syncrude reduced Unit Operating Expense from $18 per barrel to $12 per barrel in our best years of the 1990's.

Recently, I spent approximately 1 year on each of the following tasks:

  • Advising Marathon Oil on their entry into the Canadian oilsands

  • Created the draft Water Management Strategic Plan for Syncrude Canada Ltd.

  • Consulted to Exxon/Esso on the Kearl Oilsands Project

Yours truly,

Allan M.R. MacRae, P.Eng.

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