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Calgary oil company looking at setting up pilot oil upgrader in Meota area
January 25, 2013
A Calgary oil and gas company has entered into a Letter of Intention (LOI) with another oil and gas firm to extract oil and gas in the Meota area.
On top of that, Bayshore Petroleum Corp also plans to sign a deal next week with a Chinese company to use new technology to turn heavy oil into diesel; a product they think will be much more marketable. The oil will be upgraded via a small pilot upgrader to be built in the area.
“It’s a very small volume, it’s around 350 barrels processing capacity at this stage,” Bayshore President and CEO Peter Ho said during an interview with the Daily News. “If that technology works, I think it will spur a lot of activity in the area.”
These moves won’t likely result in many jobs in the immediate future, Ho says. But if the technology and partnerships work the way he hopes they will, in future years, they may build a much bigger upgrader. That could create many more jobs, although he could not say how many jobs might be created.
He declined to name the company they’re partnering with to get the oil and gas, citing privacy concerns.
Under the LOI, Bayshore can earn up to a 50 per cent working interest in 1.5 sections (960 acres) of oil and gas lease acreage. Under the LOI, Bayshore will earn that working interest by drilling up to two horizontal wells and developing the property to supply heavy oil to an upgrader the company plans to build in Meota area.
Plans call for the two firms to complete a formal agreement by March 1 after terms and conditional have been finalized. Bayshore will have until July 31 this year to finish drilling those two earning horizontal wells.
Ho says his company will be the operator. It will hire contractors to do the actual horizontal drilling.
So far, six vertical oil wells have been drilled and completed in the Upper Mannville formation in the area. Most wells found more than six metres of a heavy oil bearing formation.
Ho says he expects to sign a deal next week with CanSino Corp., a private Canadian corporation in conjunction with the China Foreign Economic Co-operation Centre (CFECC) in Beijing, China.
That deal will allow Bayshore to use newly-developed technology to convert the heavy oil it extracts in the Meota area into diesel fuel via the on-site upgrader.
Ho says the goal is to have the pilot upgrader built by June or July.
He predicts only five to 10 jobs will be created by construction of the pilot upgrader – mostly welding at that sort of thing. However, if the pilot project is successful, many more jobs could be created in the future.
“If this pilot works, we definitely will be looking at expanding into a much bigger plant. It could be at least 10 or even 20 times than what we have now,” Ho said.
However, it’s too early to say how many jobs that expansion might create if it occurs, because Ho says the company hasn’t even decided where such an expanded plant might be located. They want to see how the pilot project turns out before worrying about issues like that.
It they to go down that route, they’d have to determine the best site for the plant – where they could most easily access the most oil.