Paris: Total, Europe's third-largest oil company, may postpone an investment decision in the Joslyn permit of Canada's oil sands due to costs and has suspended and may dismantle a pilot project.
"The final investment decision on Joslyn may be pushed back a few months," Total spokesman Kevin Church said, adding the production potential of the project is 230,000 barrels of oil a day. "We are studying costs and talking to the contractor."
Total was scheduled to make a decision on Joslyn, in which it has a 74 per cent interest, at the start of next year. A Total production unit within the permit that started in 2006 didn't reach an expected output level and has been stopped, the Paris-based company said in its 2008 annual report published on its Web site April 3.
"Both the mothballing of this site's facilities and the possible complete removal of assets from this site are being studied," the report said. Reserves for the site were "debooked" from the end of last year.
Total earmarked more than $10 billion during the next 10 years to boost production from Alberta's oil sands, which are about 750 kilometres northeast of Calgary and are estimated by the provincial government to hold the largest oil reserves in the world outside of Saudi Arabia.
Total has said it will make final investment decisions on projects in the region next year and that developing the reserves are an "important part" of its strategy.
The Joslyn pilot project using a technology called steam assisted gravity drainage, or SAGD, did not reach the expected 10,000 barrels a day production plateau "due to constraints on the pressure of the steam being injected", Total said in the report.
The company had expected to reach this peak output as early as the beginning of last year through the use of the technique to extract oil from the tar sands using steam rather than mining equipment. Pairs of wells are drilled in the oil sands and steam is pumped through one, heating the bitumen and allowing it to flow out the other.
The Joslyn permit is expected to be developed through mining techniques in two development phases of 100,000 barrels a day of bitumen each, according to the Total report.
Joslyn's production potential compares with Total's overall output in the fourth quarter of last year of 2.35 million barrels of oil equivalent a day.
