DOING BUSINESS

Vancouver Rail Project Goes to SNC-Lavalin

BY NORDAHL FLAKSTAD
Freelance Writer

Editor’s note: Doing Business is a roundup of business news relating to engineering, geology and geophysics.

The SNC-Lavalin Group Inc. has been selected to design, build and operate a new high-speed, grade-separated public transit system, being readied for the 2010 Vancouver Winter Olympics.

The announcement was made by RAV Projects Management Ltd., the agency overseeing procurements, design and construction of the 19.5- kilometre line. It will run from downtown Vancouver to the Vancouver International Airport and Richmond. British partner Serco Group is joining SNC-Lavalin for the $1.76-billion project, scheduled for start of construction next August.

In a separate development, SNC-Lavalin ProFac Inc. has won a $490-million, four-year contract to maintain 319 federal buildings.

Interchange Project In South Edmonton Meets Amber Light
Increased costs could delay construction of a long-discussed major interchange at a South Edmonton intersection that now handles about 90,000 vehicles a day.

Earlier projections placed costs of the planned roadwork at 23rd Avenue and Calgary Trail at $74 million — a figure that now has risen to $107 million. That would turn it into one of the costliest transportation projects in the city’s history.

Besides dealing with the intersection of two major roadways, the project, which includes bridges, has to take into account nearby pipelines and a rail line.

Completion date had been estimated for 2006, but the work will likely not be finished until 2007, according to City of Edmonton Transportation Department Manager Rick Millican, P.Eng.

City Manager Al Maurer, P.Eng., says project completion now is dependent on assistance from senior governments.

Canadian Natural Expands Production With Acquisitions
Canadian Natural Resources Ltd. has paid $698 million to acquire Western Canadian petroleum assets from Anadarko Petroleum Corp. of Houston, Tex.

Canadian Natural was the major purchaser when Anadarko, for $853 million, sold 76 per cent of its Canadian field assets, representing 75 per cent of its Canadian reserves. Through the sale, Canadian Natural acquires 7,500 barrels a day of light crude production and an estimated 105 million cubic feet per day of natural gas production.

Canadian Natural also announced it will scale back acquisitions following a year in which it spent $1.8 billion purchasing property and midstream assets. Chairman Allan Markin, P. Eng., identified heavy oil drilling in Alberta’s Foothills as one of Canadian Natural’s upcoming priorities.

Meanwhile, Canadian Natural has postponed until late February a go-ahead on its Horizon Oil Sands Project. The decision was delayed after forecasts that the project’s cost might rise by as much as 25 per cent above the original $8.4-billion estimate.

Bright Export Markets Prompt Coal Expansions
Luscar Ltd. has launched engineering, design and economic studies with an eye toward doubling thermal coal production at its Coal Valley mine near Edson.

It could mean increasing production to four million tonnes from two million tonnes a year. Upgrading and acquisition of new equipment associated with the expansion is expected to cost $75 million. According to Luscar President and CEO Dennis Maschmeyer, P.Eng., expansion plans are partly driven by a strong export market.

Luscar also reports that it will add 1.8 million tonnes of production to 3.5 million it currently mines annually adjacent to EPCOR’s Genesee power plant west of Edmonton. The increased production will meet fuel demands from the 495-megawatt power plant EPCOR will soon bring online.

The Fording Canadian Coal Trust, meanwhile, plans to spend $70 million with its partners to double annual production (to 2.8 million tonnes from 1.4 million tonnes) at its recently opened Cheviot Mine. The mine, adjacent to Jasper National Park, continues to face legal challenges from environmental groups.

TransCanada Poised To Protect Rights To Northern Pipeline
TransCanada Corp. will work hard to maintain rights it has under the 1970s-era Northern Pipeline Act to build a pipeline to bring natural gas from the North Slope, through northern Canada to Alberta.

Rivals, notably BP Group and Enbridge Inc., are pressing for changes to legislation dating back more than two decades.

TransCanada CEO Hal Kvisle, P.Eng., notes that his company already has spent several hundred millions maintaining rights-of-way and pre-building a portion of the project through Alberta.

“It’s really about historic rights. We’ve held the franchise to build the Canadian section for a long time,” Mr. Kvisle said.

In other developments, TransCanada announced it has completed purchases of two pipeline systems in the U.S.

The Gas Transmission Northwest acquisition gives TransCanada a 2,174-km gas network running south from the B.C. border, while the North Baja system links California and Arizona.

Shear and Partners Push on With Nunavut Diamond Play

At their Churchill, Nunavut, joint venture, Shear Minerals Ltd., Stornoway Diamond Corporation and BHP Billiton Diamonds Inc. this fall drilled-tested 11 targets and discovered six kimberlites.

“In 2004 we learned from every drill-hole and every surface sample,” said Shear President and CEO Pamela Strand, P.Geol. “More importantly, we laid the foundation for a systematic and stepped-up drill program in 2005. We will not stop drilling until we have located the source of the high diamond potential chemistry.”

A spring drilling program is planned to begin in the first quarter of 2005. Together with targets drilled this summer, it will test up to 40 targets.

The 8.5-million-acre Churchill diamond project, near the community of Rankin Inlet in the Kivalliq region, is a new and expanding kimberlite district that Shear and its partners discovered in 2003.

Suncor Proceeds With Expansion
Suncor Energy will spend $3.6 billion to increase output at its Fort McMurray oilsands operations to 350,000 barrels a day by 2008. Of the spending, $2.8 billion will go towards an upgrader and $1.5 billion will be associated with increased feedstock supply.

Doubts were cast on the expansion earlier this year as a result of a royalty dispute between Suncor and the Alberta Government. Engineering is now 50 per cent complete, and initial fieldwork and production of major vessels are underway.

Bell West Sees Cost Of SuperNet Rise
Higher construction outlays have boosted Bell West’s cost for building the Alberta SuperNet by 22 per cent.

The high-speed broadband network, which will link 422 Alberta communities and some 4,700 government offices, schools, health-care facilities and libraries, now is expected to cost

$333 million. That compares with the original planned cost of $295 million, of which the province is committed to $193 million.

Bell said the higher construction costs for the last phase were “due to changes necessitated in construction methods to connect individual government buildings to the network.”
SuperNet completion, scheduled for late 2004, will be followed by testing and activation for the system in the new year.

Syncrude Spending To Reduce SO2 Releases
Syncrude Canada Ltd. will spend $400 million over the next year on a sulphur dioxide emissions reduction project at its Fort McMurray operations.

Approved by Alberta Environment and the Alberta Energy and Utilities Board, the project is expected cut in half sulphur dioxide in waste gas from present levels of 245 tonnes a day. To date, design, engineering and preliminary work have cost $15 million.

Labour Shortages Could Shackle Drilling
Manpower rather than equipment will be the main restricting factor on the drilling sector in the next year, says Roger Soucy, president of the Petroleum Services Association of Canada.

He said recently that the industry will be looking for up to 100,000 workers in the next year. With Alberta expected to drill 18,610 wells in 2005, it will exceed by 10 per cent record levels achieved in 2004.

Coalbed methane wells drilled in Alberta alone are expected to increase to about 3,000, up from 1,000 in 2004.

Mr. Soucy predicts the projections will hold up even if oil prices drop as much as 30 per cent below recent per-barrel levels of plus-$50 US.

Celanese Closes Pioneering Plant In Edmonton
Most of Celanese Canada’s Edmonton complex, a fixture on the Alberta petrochemical scene for more than half a century, is closing.

“This isn’t a mothballing. This is a shutdown, with no chance of it coming up again,” said Plant Manager Andy Day, P.Eng.

The plant, which recently had about 300 employees, produced cigarette tow. Much of the output was exported to China, which is increasingly meeting its own demand. Tow is used in cigarette filters.

A smaller methanol plant, with about 100 employees, will continue operations after the main facilities are razed.

Senior Engineers Give Poor Marks To Deregulation
The Canadian Society for Senior Engineers, with membership drawn from the ranks of life members of the Engineering Institute of Canada, has prepared a report critical of electrical deregulation in Alberta. Where is the Outrage? says deregulation has cost Alberta $7.7 billion and reduced the province’s competitive advantage in attracting industries with high-energy reliance.

The committee preparing the report included APEGGA Life Member Keith Provost, P.Eng., a former chairman of the Alberta Electric Utilities Planning Council and former vice-president of ATCO Power, and Don Peterson, P.Eng., also a former ATCO official.

The report proposes a 12-point plan to revamp the system. It includes having supplies enter long-term supply contracts tied to the cost of power generation.

The Independent Power Producers Society of Alberta has responded to the CSSE report, saying adoption of the recommendations would make providing electricity in Alberta more complex. The independent producers challenge CSSE’s claims regarding the magnitude of price increases associated with deregulation.

Province Advised Against Oilpatch Ban On Fresh Water Use
Following an 18-month study, a provincial advisory committee on water use has rejected an immediate ban on fresh water use for oil recovery. Instead, the advisory body calls for increased conservation and steady reduction in non-saline water use by the petroleum industry.

The report urges data gathering to identify priority areas, and calls for regulation within the next three years requiring the industry to limit fresh water uses to situations where there are no alternatives.

Less than two per cent of Alberta’s water use is associated with oil wells. Agriculture accounts for 46 per cent.

Clearer Rules Needed In Northwest Territories For Cleanup of Mines
The Northwest Territories is lagging behind other North American jurisdictions in cleanup of mines once production has ended.

“We really do need some standards or targets to provide some certainty for both industry and the public,” Kevin O’Reilly, research director for the Canadian Arctic Resources Committee, explained to a recent Yellowknife geoscience forum.

He added that N.W.T. legal requirements are not particularly clear, and security deposits posted by mining companies have at times fallen well short of the actual cost of mine cleanup.

Purchase Extends TELUS Into Videoconferencing
TELUS has agreed to buy the country’s largest video-teleconferencing company. The phone company is paying $15 million for Adcom, a privately held company with offices in Calgary, Edmonton, Ottawa, Montreal and Halifax.