Sinopec invests in oil extraction
China’s second largest energy group, Sinopec, has agreed to pay around C$105 million for a 40 percent share of the proposed Northern Lights oilsands project in northeastern Alberta, Canada.
The rest of the project will continue to be held by Synenco Energy of Calgary, a privately held company.
Oil is procured from oilsands deposits by injecting steam into wells or through surface mining and then putting the tar-like substance through an extraction process.
That process is expensive, but high oil prices make the exploitation of oilsands more attractive now than when this resource began to be exploited in the late 1970s.
The deal emphasizes China’s desire to gain access to long-term oil supplies. Earlier this year CNOOC, another Chinese oil company, purchased a one-sixth portion of MEG Energy, another privately held company with interest in undeveloped oilsands deposits.
The Northern Lights project is expected to begin producing oil in 2010 at a cost of C$4.5 billion (US $3.6 billion).
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