While activity in northeast Alberta may not be as red-hot as a few years ago, the oil sands will remain an important source of business for Canadian manufacturers and suppliers.
July 7, 2010
by Nordahl Flakstad
Suncor oil sands plant in Fort McMurray, Alta., where hydrotransport pipelines are used to deliver crushed and sized ore to primary extraction.
Photo: Suncor Energy
While activity in northeast Alberta may not be as red-hot as a few years ago, the oil sands will remain an important source of business for Canadian manufacturers and suppliers. That was the message driven home to representatives of more than 400 national and international businesses who attended the recent 10th National Buyer/Seller Forum in Edmonton. Organized by the Alberta government and Canadian Manufacturers & Exporters (CME), the forum allowed manufacturers to show what they have to offer and gave oil sands firms a chance to explain where they are headed and what goods and services they’ll need to get there.
Woven into the optimistic assessments were cautions against repeating overruns and excesses of the past, plus calls for smarter, leaner and “smaller-bite” approaches to development.
Don Thompson, president of the Oil Sands Developers Group, a non-profit organization representing oil sands operators and developers, told the forum that while the past year was challenging for the Canadian economy and the energy sector, “I’m feeling pretty optimistic about where we are heading.”
Noting that during the next 25 years, the oil sands are capable of generating $1.7 trillion in wealth while creating 456,000 jobs across Canada, Thompson stressed the industry will remain a “cornerstone of our economy and energy security.”
Almost 400,000 barrels of bitumen a day (bbd) of new capacity under construction will be added to 1.8 million bbd of existing capacity. Close to 2 billion bbd of projects already have regulatory approval and a similar capacity is under regulatory review. About $4 billion annually are channelled into new construction. However, ongoing demand for goods and services at already operating oil-sands facilities is often overlooked.
Maintaining existing oil sands output requires $18 billon a year—about a third of it for MRO-related goods and service supporting current production. And, Thompson emphasized, “this goes on for the entire life of this resource, which in some cases stretches out 40 or 50 years.”
“While capital and new construction tends to get the headlines, the real flywheel of this economy is that we are building the long-term, sustainable operating requirements of the oil sands infrastructure. Every time a piece of equipment is built, it must be repaired and maintained. Every time that happens, the opportunity exists to make it more reliable, cheaper to operate and to improve its environmental performance.”