It seems like everywhere you go in the Lakeland the roads are packed with oil trucks, tankers and other vehicles on there way to or from the region’s many oilsands sites.
Local development is on the rise as companies continue to expand and develop operations and projects in the Cold Lake/Bonnyville region.
“Look at the employment opportunities for the region. Look at how many people are here versus 20 or 30 years ago,” said MD of Bonnyville Reeve Ed Rondeau.
“We have increased in population. We have increased in job opportunities. There has been more development, more subdivisions built, more houses built and more opportunities for the people. There are many more dollars floating around.”
The oilsands region surrounding Cold Lake and Bonnyville has seven companies operating 16 different projects. Overall the region has over 80,000 wells, 56,000 of which are located within the MD of Bonnyville.
“The region has grown exponentially. If you look at the numbers, there are over 56,000 wells in the MD of Bonnyville that are serviced by the trucks and companies in the region,” said Town of Bonnyville Mayor Gene Sobolewski. “We as leaders just have to look at how to manage this growth and work within the growth so that we can keep going. We are the economic engines not only of Alberta, but of Canada. It is a good problem to have.”
Figuring out how to manage the expected continued growth of the Bonnyville/ Cold Lake region was something the Alberta Government undertook in 2012 when it compiled a special report.
The document, called the Comprehensive Regional Infrastructure Sustainability Plan (CRISP), established long-term framework for future infrastructure needs to deal with expected oilsands expansions and population growth.
CRISP reports were created for the three oilsands deposits across Alberta: the largest, the Athabasca deposit, located in the Municipality of Wood Buffalo; the second-largest deposit in the Bonnyville Cold Lake region (referred to as the Cold Lake Oil Sands Area or CLOSA); and the smallest deposit in the northwest Peace River region.
Together these three deposits make up 170 billion of the 173 billion barrels of oil reserves in Canada.
CLOSA, when referenced in the CRISP report, refers to an area that includes the City of Cold Lake, 4 Wing Cold Lake, Bonnyville, Elk Point, St. Paul, Two Hills and various other municipalities, including the MD of Bonnyville and parts of the counties of St. Paul and Lac La Biche. CLOSA also includes oilsands activity within the Cold Lake Air Weapons Range, a tract of land measuring 180 km by 65 km covering an area of 11,700 square kilometers, which lies north of Bonnyville and Cold Lake and stretches into Saskatchewan.
Bitumen production in the region sits at around 535,000 barrels per day, with the report estimating that to jump to nearly one million barrels per day by 2025.
By 2045 the population of the CLOSA is estimated to reach approximately 95,000 people, which represents an annual rate of growth of approximately 1.2 per cent. This growth would be driven by employment growth to just over 34,000 jobs.
The report takes an in-depth look at the infrastructure required to meet the demands of a growing population, which included building new health centers and educational facilities, creating a regional water line and developing and improving the roads and highways.
Although it is difficult to project an exact representation of what the region will look like in 10, 20 or 30 years; taking a deeper look at the economics of the region helps paint a picture.
“It is the heart of the area. It has replaced what 4 Wing Cold Lake was for many years; the oilsands are the driving force of the community and the region,” said Cold Lake Mayor Craig Copeland.
“For residents of the area it has become the number one industry for employment. Significant livelihoods are attached to it, whether you are a restaurant owner, hotel owner or just a field operator. It has also got spin off into the food and hotel industries.”
Cenovus Energy is one of the larger players in the area.
“One of the commitments we make to all of the communities where our staff live and the company operates is that they will be better off because of our presence,” wrote Reg Curren, senior media relations advisor with Cenovus, in an email.
“We do this by being a socially and environmentally responsible developer of energy resources, which in this region includes both oilsands and natural gas assets. We’re committed to supporting local businesses wherever we can, including a significant amount with Aboriginal communities in the area.”
Cenovus’ Foster Creek project, located on the Cold Lake Air Weapons Range, about 100 km north of Bonnyville, was the first steam-assisted gravity drainage (SAGD) operation in Canada. Development of the project began in 1996, with it reaching the commercial stages in 2001.
Foster Creek’s five-phase (A-E) project produces 120,000 barrels per day with a three-phase expansion (F-H) expected to add another 90,000 barrels per day to that output.
First production from phases F and G is expected sometime in 2015, while phase H is projected for 2016. Once those phases are complete Cenovus plans to move ahead with optimization work adding an additional 35,000 barrels per day between 2016 and 2019.
Once optimization is complete, Foster Creek is expected to have gross production of around 245,000 barrels per day for all eight phases (A-H).
There are 935 Cenovus staff members employed to operate Foster Creek along with approximately 500 service providers, 1,000 construction workers and about 650 other workers engaged in a wide range of projects.
Although Cenovus has only paid government royalties for a few years (since 2010-11) it has already contributed a fair share of money toward the government and region. In 2013 the Foster Creek operation contributed about $156 million in royalties (gross) to Alberta.
In 2013, Cenovus spent about $370 million on goods and services with businesses based in the Bonnyville/Cold Lake region.
Curren says the company encourages their employees to be actively involved in their communities.
“Cenovus supports employee involvement in their communities in a number of ways – through our annual employee giving campaign and matching gifts where the company matches employees donations to charitable organizations up to $25,000 per employee per year, as well as through our employee volunteer program that provides grants to the organizations where our employees and their families volunteer their personal time.”
Cenovus has made a variety of significant donations to nearby communities over the past few years, including two separate donations of $750,00 and $600,000 to the Cold Lake Energy Centre, $500,000 towards the Bonnyville Centennial Centre, $350,000 to the Lakeland FASD Centre, and two separate donations of $50,000 and $25,000 to the Bonnyville Health Foundation.
Although Cenovus’ ever-expanding Foster Creek operation is already large, it is actually the second largest operation in the region.
Imperial Oil Limited has been in the Cold Lake region since the early 1960s. After two decades of research and pilot work they launched to commercial production in 1985 and have been a major producer in the region ever since.
“We’ve been part of the Lakeland community for more than five decades, and we’re committed to helping our community remain strong, healthy and prosperous,” wrote Imperial Oil spokesman Pius Rolheiser in an email to the Nouvelle.
“To work towards that goal, we support numerous community organizations and initiatives through donations, sponsorships and volunteerism. Our employees have, and continue to serve the community in a wide variety of ways – from volunteer organizations, education, recreation and even municipal government. Our employees are committed to being part of the community and working to improve the quality of life for everyone.”
Imperial Oil’s Cold Lake Operations consists of four plants – Leming, Maskaw, Mahihkan and Mahkeses – which cover about 780 square kilometers of oilsands 50 kilometers northwest of Cold Lake.
In 2009 the company’s Cold Lake operation produced its one-millionth barrel, becoming the first and only in-situ operation in Canada to do so.
In 2011 their operations produced 160,000 barrels per day and with expansions nearly complete the number will likely rise dramatically.
Nabiye, Imperial Oil’s new $2 billion expansion projected was 89 per cent complete in June. The project’s start-up date is still expected for late 2014, with capacity production set at around 40,000 barrels per day.
Imperial Oil is sitting on a lot of oil, with reserves on the lease estimated at 1.7 billion barrels, while the contingent resource there is estimated at 3.3 billion barrels.
“Even after nearly three decades of commercial production, we continue to believe Cold Lake’s best days are still ahead of it,” said Rolheiser.
That is really good news for the 425 employees and 1,200 contractor workers that are working on site on a daily basis. Another 1,000 construction workers frequented the site for the better part of 2014, building the Nabiye expansion.
Imperial Oil paid $422 million in federal and provincial taxes in 2012 and $681 million in royalties to the Alberta government. It also paid $21 million in local property taxes to the MD of Bonnyville.
Although taxes contribute to the region, Imperial Oil has continued to donate to a variety of organizations over the last few decades. Some of the most recent contributions include $170,000 to the Lakeland United Way, $60,000 to the Bonnyville Health Foundation (over the last three years), $35,000 to host the DiscoverE Science Camp, and $5,000 toward the Bonnyville Jr. A Pontiacs’ education breakfast.
“One of the first things that any group looks to when they have a significant project (that needs funding) is to one of the oil companies,” said Sobolewksi. “The companies are always providing assistance to benevolent organizations and that is a net result of prosperity. I can speak directly from experience running the Christmas Hampers, the program wouldn’t be anywhere near as successful without the contributions from some of the industries nearby.”
Stealing the headlines in the region has been Canadian Natural Resources Limited (CNRL), which operates its Primrose and Wolf Lake sites approximately 55 kilometers north of Bonnyville. Over the past year the company has been dealing with four separate sites that had bitumen seeping to the surface at its Primrose East site.
The company recently had an application approved to convert the operation from high-pressure cyclic steam to low-pressure steamflood, which they believe will eliminate the risk of future flow-to-surface events and cracks in the caprock.
Development at CNRL’s Wolf Lake and Primrose South sites began in 1985. Since then the company has added additional pads and wells to create its Primrose North and East sites. Both CSS and SAGD technologies are currently employed to produce a combined 100,000 barrels per day.
The four sites have roughly 545 employees along with 200 contractors, and more expected to be hired when the company expands.
“We see the potential to add significant incremental thermal in-situ production from our oilsand leases in the Primrose/Wolf Lake area. We are currently in the early planning stage for a major expansion of the Wolf Lake plant with in-steam planning for 2020-2021,” read an email from CNRL stakeholder relations.
“The region is a core part of CNRL’s operations and will continue to be a key area of growth for years to come.”
Several significant community investments made by CNRL include $1 million to the Bonnyville Centennial Centre, $500,000 to the Cold Lake Energy Centre, and over $100,000 to the Bonnyville Regional Airport.
In 2013 CNRL’s Primrose/Wolf Lake operations paid a combined $715 million in royalties and $9.1 million in property taxes to the MD of Bonnyville.
While Cenovus, Imperial and CNRL are the three big players in the region, they aren’t the only companies.
Osum Oil Sands Corporation, which is in the middle of going commercial with its Taiga project, purchased Shell’s Orion project for $325 billion in 2014. The two projects are located just off the north and west shores of Cold Lake.
Taiga, which is currently at an advanced stage of engineering, is expected to produce 45,000 barrels per day once fully operational. Orion, currently pumping out about 6,700 barrels per day, has been approved for expansion and could reach a capacity of 35,000 barrels per day.
Osum is has become progressively involved with the schools in the Bonnyville/Cold Lake region, recently supporting a group of students to attend a special conference at the University of Alberta and offering a wide variety of scholarships every year.
Husky Energy’s Tucker project, which is 30 kilometers northwest of Cold Lake, has been up and running as a commercial site since 2006. It is currently operating at about 30,000 barrels per day.
The company is also in the development stages of a second project, called Caribou, which is located on 35,000 acres of land 53 kilometers northwest of Cold Lake. Its pilot project has been approved for 10,000 barrels per day.
Husky’s Community Investment program has supported a variety of health, educational and other community initiatives in the region over the years.
Pengrowth Energy Corporation is also in the midst of starting up a commercial development in the region. The company’s $590 million Lindbergh project received approval in mid-July with first-steam expected in late 2014.
The site will start at 12,500 barrels per day with two other phases being implemented later on. The third and final phase is expected to bring the project to 50,000 barrels per day by the end of 2018.
The smallest pilot project in the region is Baytex’s Gemini operations, located 35 kilometers southwest of Bonnyville on the shores of Angling Lake. The project had first steam in late January and quickly reached 1,000 barrels per day, the upper-end of what the company had hoped to produce.
Although the site was initially approved from a 10,000 barrel a day operation, representatives from the company are at this point only considering launching a 5,000 barrel per day operation.
As of the end of August, Baytex officials had yet to decide if they were going to invest in a commercial operation at Gemini. The site currently has nine employees, with the company employing a total of 25 located in the Bonnyville region.
Over the past five years Baytex has paid $1.5 millon in property taxes to the MD of Bonnyville.
“Baytex has long owned and operated assets in the area. We hold a material land position and will look to be increasing activity levels in the region over the course of the coming years,” wrote Erin Cripps, stakeholder and community relations representative for Baytex, in an email to the Nouvelle.
“Baytex strongly believes in employees becoming involved in the community. We are committed to being a good neighbour in the communities which we operate.”
The company has supported initiatives such as a school lunch program and Treaty Days event with Cold Lake First Nations and replaced the roof of the Beaverdam Hall.
“We have the best of both worlds. We have prosperity, we have jobs – yes we have employment issues and some housing issues – but in the overall scheme of things it is better to have growth than stagnation,” said Sobolewski.
“I see the growth continuing. Even if the mega-projects slow down we are still going to be a very healthy and prosperous region for years to come. Overall, if we were to compare this region to the others in Alberta, this is probably the best place to live.”