September 19, 2012

New oilsands facility gets the go ahead from regulators

RICHARD GILBERT

staff writer

Osum Oil Sands Corp. has received approval from the Energy Resources Conservation Board (ERCB) for the construction of a 35,000 barrel per day thermal project near Cold Lake, Alberta.

“Regulatory approval of the Taiga Project is a significant milestone for Osum on our path to full-scale operated commercial production.” said Steve Spence, Osum’s president and chief executive officer.

The Taiga Project will be located about 25 kilometres north of Cold Lake, Alberta, within the Municipal District of Bonnyville. Osum is planning to construct and operate a commercial crude bitumen recovery facility, which uses steam-assisted gravity drainage and cyclic steam stimulation recovery processes.

The project will be built in stages.

Construction of the first phase, which will have a 10,000 bpd output, is scheduled to get underway in 2013. This phase involves the construction of a central plant, well pads, access roads, pipelines and other facilities.

The central plant will need about 500 metres by 600 metres (or 74 acres) of land, which is about the same size as 56 football fields.

New roads will be built to access the well pads and central plant from Highway 897.

Construction employment is expected to peak at about 280 people, with most employees expected to come from the nearby communities. First production is expected in 2016.

The second phase of the project will double Taiga’s capacity and includes a cogeneration unit.

Taiga will have both positive and negative effects on the Cold Lake First Nations. It will create new employment and business opportunities. However, there will be some loss of traditional land uses.

Construction will require additional sources of financing and Osum is currently evaluating funding alternatives that will position the project for approval by Osum’s board.

The project has been assigned 359 million barrels of proved plus probable reserves and will recover bitumen at a rate of up 35 000 barrels per day for about 30 years.

Based in Calgary, Alberta, Osum Oil Sands Corp. is a private exploration and production company that is developing long-term oil sands projects in two regions of Northern Alberta: Cold Lake and the Grosmont carbonates region (Saleski). In December 2011, a group of Canadian and foreign investors agreed to invest $500 million in Osum to develop these projects.

These investors included existing Osum shareholders such as Warburg Pincus and Blackstone Capital Partners and new investors, such as the Singapore Investment Corp and KERN Partners, a Calgary-based private equity firm.

Osum’s properties are estimated to contain 3.5 to 4 billion barrels of recoverable resource, which could sustain production of up to 250,000 barrels of oil per day for 30 to 40 years.

Osum’s management team has oilsands experience from prior positions at Shell Canada, Canadian Natural Resources Ltd., and Amoco.

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