Koch Canada and UTS Energy (United Tri-Star Resources) recently announced that the companies are on track with the Fort Hills Oil Sands Project’s exploratory drilling program and prefeasibility study.
"We have completed our exploratory drilling program which has provided initial confirmation that our leases contain reserves sufficient to sustain an operation supplying up to 90,000 barrels of bitumen per day," said R. Aldridge of Koch Canada. "Our preliminary analysis of the results has not changed our view of the quality or size of the resource."
The prefeasibility stage of the Fort Hills Oil Sands Project will continue for the rest of this year with a complete resource assessment scheduled for April 2000. Other elements of the project development schedule--the permit application cycle and research and development, for example--will be undertaken concurrently. Koch has committed to making a final "go-no-go" decision on the Fort Hills development by early 2002, based on the results of the drilling program, public consultation, feasibility studies, economic climate and associated engineering and environmental studies.
The Fort Hills leases (Numbers 5 and 52) are located on 16,000 hectares of land about 90 kilometers north of Fort McMurray and border on Syncrude’s Aurora lease. If all goes well, Koch Canada would like to see a world-class facility at the site incorporating the latest mining, extraction and partial upgrading technologies. A full-scale upgrading facility will not be required at the Fort Hills site given Koch Canada’s access to the company’s Pine Bend refinery in Minnesota. Cost and competitive advantages are expected to emerge as a result.
Koch Canada acquired a 78 percent interest in the Fort Hills leases in May 1998. UTS Energy holds the remaining 22 percent. According to a joint-venture agreement between the companies, Koch Canada is the operator of the Fort Hills project.
Koch’s acquisition of the oil sands project last year included miscellaneous assets from Solv-Ex Corporation. UTS increased its holdings from 10 to 22 percent in a separate agreement with Solv-Ex.
Koch Canada, Canada’s largest crude oil exporter, is a wholly owned subsidiary of Wichita, Kansas-based Koch Industries Inc., the second-largest privately held company in North America, as ranked by Forbes.
The Board of Directors of UTS Energy Corporation has agreed to expand the company’s exposure to the Canadian energy sector. A variety of avenues will be pursued to develop a suite of assets which will complement the bitumen assets currently held through the proposed Fort Hills Oil Sands Project. UTS believes that a significant opportunity to build a major bitumen/heavy oil company in Canada is now developing. This initiative is evolving primarily as a result of currently depressed oil prices and the deteriorating environment in the Western Canadian oil industry.