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US Oil Sands : Canada-owned oil sands mine in Utah to begin producing in fall

07/25/2015 | 08:01am US/Eastern

Canada’s U.S. Oil Sands (TSX-V:USO) is fine tuning details to begin production at its mine in eastern Utah, the first commercial oil sands operations in the United States, after receiving final regulatory approvals from local officials late last week.

While the mine had already been approved for construction, the Calgary-based company recently submitted a proposal to expand it. The Utah Division of Oil, Gas, and Mining approved that plan, but ThinkProgress reported it did so on the condition that the company submits a comprehensive strategy to monitor air and water quality.

Environmentalists who have been fighting the project called the decision a victory, despite the fact that both the company and Utah authorities have argued there would be little risk to water contamination from the mine, since the operation doesn’t have any connection to a groundwater source.

But a recent public hearing, community groups presented evidence from a university professor showing that water in the Book Cliffs area would be, in fact, negatively impacted by the project, which is under construction about 300 kilometres southeast of Salt Lake City.

“Unfortunately, every decision that has been made to date is the (same) as looking out at the sky today and saying it is impossible that water can fall from the sky, and I find that infuriating,†University of Utah Geology Professor Bill Johnson said about the project last month. “The conclusions are based on data that was never intended to find a hydrological resource.â€

Cheaper than in Canada

U.S. Oil Sands has invested nearly $100 million over a decade to get permits, buy equipment and develop a new technology to extract crude.

The firm says its innovative approach eliminates need for tailings ponds, requires 50% less energy input than traditional oil sands projects, recycles 95% of the water used and has small above ground footprint.

The companys pioneering process uses a citrus extract called d-Limonene as a solvent to separate bitumen from sand. d-Limonene oil from orange rind is used industrial cleansers.

The Utah mine is being built at roughly a third of the capital cost of larger oil sands mines in northern Alberta, where new capacity is added for about $100,000 per barrel.

A new report released this week by think-tank IHS predicts costs will negatively weigh on Northern Alberta oil sands production. The study estimates that output will grow by 800,000 barrels per day to about 2.9 million bpd by 2020. That’s down by 280,000 bpd from the 1.08 million bpd growth it estimated last year, when global oil prices were twice as high.

The forecast assumes projects now under construction will be built despite low oil prices.

Longer-term, however, IHS expects oil sands growth to continue. It said the oil sands are economically competitive with resources such as deep-water and North American tight oil but face pressures including project costs, timing of non-rail transportation to new markets and shifting fiscal terms in Alberta.

(c) 2015 Fusion Media Limited. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info)., source Middle East & North African Newspapers

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