PetroChina is making a US$1.7 billion investment in the Canadian oil sands.
Athabasca Oil Sands Corp. said Monday PetroChina is buying a 60 percent working interest in its Mackay River and Dover oil sands projects in northeastern Alberta.
Bill Gallacher, chairman of Athabasca, said it's hard to finance oil sands developments in the traditional equity markets. He said a joint venture with one of the world's largest oil companies will ensure the two projects are completed on time.
"Oil sands projects are very capital-intensive, long-term investments and difficult to fully finance in the traditional equity market," Gallacher said in a statement. "AOSC therefore decided to look for joint venture partners, and these strategic joint venture arrangements with PetroChina, one of the world's largest energy companies, can ensure that the MacKay River and Dover projects will be developed in timely manner, which is excellent news for Alberta and the rest of Canada."
The global sell-off of commodities last fall hurt Alberta's oil sands industry, but as the price of oil runs up again investors are looking to develop an industry that was previously plagued by the inflationary pressures of labor and steel in the once booming region. The oil sands sector cooled last fall as every major company scrapped or delayed some expansion plans.
High prices — a barrel of oil reached almost $150 last summer and is around $70 now — are needed to make future oil sands projects economical. Since it's costly to extract oil from the sands, using the process on a widespread basis began to make sense only when crude prices climbed.
Athabasca Oils Sands Corp. calls itself one of the largest lease holders in the Athabasca region with net working interest in more than 1.3 million acres.
PetroChina Co., Asia's largest oil and gas company, is the world's second-biggest energy company by market value.