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Osum Oil Sands Corp. CEO Steve Spence says he used to call Cold Lake the “unknown story in the oil sands”.
Not any more. While the city of Fort McMurray further north has garnered all the attention for its rapid growth, Cold Lake city has been an oil boomtown in its own right with production in its vicinity ramping up to half a million barrels per day.
“It is actually the most understood region [in terms of geology],” Mr. Spence said, although the Athabasca basin in Fort McMurray produces the bulk of Canada’s oil output.
Osum made a big move in Cold Lake in June, picking up Royal Dutch Shell Plc.’s assets in the region for $325-million. The Orion project produces about 6,700-bpd and is located close to the company’s Taiga facility, which is yet to start production. Mr. Spence expects the Orion transaction to close by the end of the month.
Mayor Craig Copeland says his city is ripe for a new boom.
“In the past few years, we have really seen a ramp up in development in our city. We have had several small booms before, but all of a sudden a lot of people have been coming to work on construction sites,” Mr. Copeland said in an interview. “This past winter —the winter that was so cold —we had approximately a good 3,000 people embedded in the community in rentals; houses and hotels were full.”
The city’s population has grown 9% in the past two years to reach just under 16,000, according to the latest census published in July. The mayor says non-residents would probably take the population closer to 18,000.
Without the oil sands, the city would primarily be home to about 5,000 military personnel and their families working at the 4 Wing Cold Lake airbase, Mr. Copeland says.
But it’s the oil that’s spinning the economic wheels. The region and its adjoining areas produce about 500,000 barrels per day and that number could rise by another 150,000 by 2017, according to Oil Sands Community Alliance data.
Cold Lake is also home to Canadian Natural Resources Ltd.’s Primrose operation, which has had trouble managing an oil leak since last year. In a ruling this month, the Alberta Energy Regulator said it’s “not prepared to approve a return to full operations at these sites until all potential risks are addressed.”
Other well-established players in the region are gearing up for a new round of expansion in the region. Imperial Oil Ltd., a long-time resident, expects to start producing 40,000 barrels per day from its Nabiya project by the end of the year. Cenovus Energy Inc. is set to expand its Foster Creek project near Bonnyville and Cold Lake by 90,000 barrels per day by the end of 2016. The company spent $370-million with businesses based in the community on goods and services last year.
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