Texas money is flowing into a small corner of Canada’s oil sands at a time when big international companies are pulling out.
Rangeland Energy, based in the Houston suburb of Sugar Land, is building a 50,000-barrel-a-day, 53-mile (85 kilometer) pipeline in the Marten Hills area of the Athabasca oil sands in northern Alberta to transport heavy crude from one of Canada’s newest oil plays. The conduit would link the remote location north of Fawcett Lake to the Plains Midstream Canada LP Rainbow Pipeline.
The investment plan is a rare reversal of fortune for Canadian oil producers, beset by pipeline bottlenecks and mandatory production curtailments. In the past two years, companies including Royal Dutch Shell Plc and ConocoPhillips have sold oil sands facilities, often reallocating funds into U.S. booming shale plays.
While Marten Hills is located in an oil sands region, producers including Cenovus Energy Inc., Deltastream Energy Corp. and Spur Petroleum Ltd. are employing multilateral drilling techniques used in shale to tap the Clearwater rock formation more than 1,600 feet (490 meters) underground, well below the oil sands that have traditionally drawn companies to the region.
Backed by San Antonio, Texas-based private equity firm EnCap Flatrock Midstream, a unit of Houston-based EnCap Investments LP, Rangeland first entered the Canadian market about three years ago. The company won the contract to build a pipeline after responding to a request for proposals from three area producers, John Millar, Rangeland’s chief commercial officer, said by phone.
“Our financial backer in Texas has always been interested in establishing a footprint in Canada,” he said. “Our observation is that the political climate is changing and people are feeling that things need to change.”
Investment in Western Canada’s oil patch has been…
Source: FuelFix
