Western Oil Sands directors approve $6.6-billion Marathon deal

CALGARY -- Calgary-based Western Oil Sands Inc. announced on Tuesday that its board of directors has approved a plan under which Marathon Oil Corp., the fifth-largest refiner in the U.S., will acquire all its outstanding shares for $6.6 billion.

The offer, a mix of cash and stock options, includes a $736.1-million debt accrued by Western.

Under the deal, shareholders of the Calgary-based junior will receive $3.8 billion in cash -- $35.20 per share -- and 34.3 million shares of Marathon's common stock and securities valued at $2.0 billion. In addition, each shareholder will also receive one share and one-tenth of a warrant to purchase shares of WesternZagros Ltd. WesternZagros is 100-per-cent owned by Western Oil Sands and has exploration rights to an oil concession in Kurdistan, Iraq.

"The transaction is the result of a rigorous and thorough process conducted with the oversight of an independent committee of the board," said Western president Jim Houck. "It accomplishes the key objective of capturing an integrated downstream and upstream opportunity."

"The Athabasca Oil Sands Project [in which Western has 20-per-cent interest] is a world-class asset with multi-billion barrel, long-life potential," said Clarence Cazalot, Marathon's president. "Our strategically-advantaged U.S.-Midwest downstream business is well positioned to provide both near and long-term solutions to maximize bitumen resources. We are joining an ongoing and expanding project with strong partners."

The Royal Dutch/Shell Group, leader of AOSP with 60-per-cent interest, aims to increase bitumen production from its oilsands assets in Athabasca to 770,000 barrels per day from a previous target of 500,000 bpd.

© The Vancouver Sun 2007

Suncor ramps up oil sands plans

NORVAL SCOTT
Globe and Mail
August 1, 2007

CALGARY -- Suncor Energy Inc. has become the latest company to advance its oil sands plans, filing an application with regulators yesterday to build an expansion to its mining operations in northern Alberta that could cost $4.4-billion.

The proposed Voyageur South mine not only would be the next step in Suncor's plans to increase its crude output to 550,000 barrels a day by 2012, but could change the way that bitumen is mined from the oil sands. The new project is expected to utilize mobile ore preparation equipment, instead of current truck and shovel systems, an advance that could reduce noise pollution, air emissions and require fewer workers.

"We believe the project has firm benefits for Suncor and for the regional, Alberta and Canadian economies," said Rick George, president and chief executive officer. "As we work to manage the impacts of industrial development, we're also working to mitigate environmental and social impacts of the project through new technologies."

According to the filing, construction of Suncor's 120,000 b/d Voyageur South mine would begin in either 2009 or 2010, with the project being brought on stream between 2011 and 2013, subject to regulatory approval and a final investment decision from Suncor. The announcement follows Royal Dutch Shell PLC saying on Monday that it plans to construct a 400,000 b/d upgrader in the oil sands that could cost up to $27-billion.

Suncor, which currently produces around 260,000 b/d of crude from the oil sands, is already expanding its oil sands operations in order to produce 350,000 b/d in 2008, and has also previously proposed the construction of a new upgrader to process its extra future output.

Approximately 20 per cent of the accessible bitumen in Alberta's oil sands can be produced through surface mining, and companies like Suncor and Syncrude already use truck and shovel systems to extract the crude, digging the granite-like bitumen out of the earth with giant power shovels, which load the product into gigantic trucks that haul it away for processing. The system is labour-intensive, so any technological improvements could produce substantial cost savings.

Suncor is keeping its cards close to its chest about how exactly its new mobile ore preparation equipment technology will improve operations, in part because other oil sands mining companies are believed to be developing similar advancements. However, according to documents on the company's website, shovels at Voyageur South will feed ore to a mobile ore-preparation system - pictures of which bring to mind enormous movable factory conveyer belts - that will first crush and then slurry ore for transport to the extraction plant.

As a result, the company will require a smaller trucking fleet, producing fewer emissions and less noise, while it also hopes to make improvements with how it deals with waste products like tailings, said spokeswoman Patti Lewis.

About 1,800 contractors are expected to be hired during the construction of Voyageur South, which will create a permanent work force of 650 once completed.

Although the mobile ore technology is expected to reduce the number of new workers the company will need at the oil sands, it won't result in reductions in the company's existing work force, Suncor has said.

Greenpeace comes to Edmonton

Nicki Thomas
Edmonton Sun
31-Jul-2007

Greenpeace is setting up shop in Edmonton with their sights set on shutting down Alberta’s tarsands.
“The tarsands are one of the most environmentally destructive projects in Canada, if not the world,” said tarsands campaign organizer Geeta Sehgal.

Sehgal said the tarsands create 40 million tons of carbon dioxide emissions every year, ensuring Canada can’t meet its commitments to the Kyoto Protocol.

“The tarsands are also taking their toll on Albertans,” said Mike Hudema, Sehgal’s colleague.

“Increased homelessness rates, urban construction shortages, skyrocketing housing prices and pollution-related health problems can all be attributed to the development of the tarsands.”

Sehgal said Greenpeace would like to see an end to tarsand development immediately.

But the industry shows no signs of slowing.

Tuesday, Suncor announced it has filed a regulatory application to expand the company’s oilsands mining operations.

Suncor, the first company to commercially develop the oilsands, claims their new plan includes “detailed environmental and socio-economic impact analyses.”

They say the project will use new technology that will reduce air emissions and requires a smaller workforce, “which mitigates the social impact on the community.”

Suncor spokesman Patti Lewis said Suncor has a vision for oilsands development that includes reducing the environmental impact.

“(Suncor and Greenpeace) don’t necessarily have to be opposing forces,” she said, adding that they’ve worked together in the past and will again in the future.

The new Greenpeace office opens at Calgary Trail and Argyll Road on Thursday.
Greenpeace