OILSANDSRE VIE W.COM :: THE HE AV Y OIL AUTHORIT Y : : SEPTEMBER 2014 : : $10AV Y Y OIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIOIL L L L L L L AUAUAUAUAUAUAUAUAUAUTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHTHORORORORORORORORORORORORORORORORORORORORORORORORORORORORORORORORORORITITITITITITITITITITITITITITITITITITITIT Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y : :: :: :: :: :: :: :: :: :: :: :: :: :: :: :: :: :: :: :: :: :: :: :: :: :: :: :: : SESEPT

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Fort Hills: Last chance to show mining projects are economic?

It’s getting hot in here: Near-term oilsands resources forecast

ExxonMobil’s $1-billion European present to Canada

The birthplace of SAGD is

forever entombed, but its most

important piece is raised from

the earth for posterity

GOODBYE UTF

COVER FEATURE

GOODBYE UTF

The birthplace of SAGD

is forever entombed,

but its most important

piece is raised from the

earth for posterity

By Deborah Jaremko

ON THE COVER: The 109-foot-tall steel headframe

of the Underground Test Facility

(UTF), which has now been

permanently decommissioned and

sealed with concrete. The work

done at the UTF formed today’s

SAGD-focused oilsands sector.

PHOTO: ROBERT OBER & ASSOCIATES INC.

14

23

Please share & recycle

this fine magazine.

73 STATISTICS Taking a close look at the inputs to

and outputs of the oilsands industry

OILSANDS DATA

63 PROJECT STATUS The comprehensive listing of Canada’s

oilsands developments

COLUMNS

78 TRANSITION

Risky climate policy

Why governments do the energy

sector no favours with status

quo approach to climate policy

By Amin Asadollahi

FEATURES

43 AMBITIOUS GOALS Fort Hills could be the industry’s last, best shot to prove new oilsands mining

projects are economically viable. Now it’s all up to project execution.

By Joseph Caouette

49 RESOURCES FORECAST 2014 Higher prices and narrowing differentials drive continued growth while

pressure builds on development costs

By Martin Silbernagel and Joseph Caouette

59 SAFE TRAVELS: RE-AFFIRMING THE PLEDGE The Coalition for a Safer 63 & 881 sets out a new wave of opportunity to

spread commitment to highway safety

By Melanie Collison

FACES OF THE OILSANDS 2014

Extra coverage only on

our website.

Look for special coverage tagged with this logo:

| 8 IN REVIEW | 13 EYES ON THE OILSANDS | 81 UPCOMING EVENTS | 82 SECTOR WATCH

25 STEVE WILLIAMSPresident and chief executive officer,

Suncor Energy Inc.

29 WAYNE PRINSPrairies director, Christian Labour

Association of Canada

33 LEO DE BEVERChief executive officer, Alberta

Investment Management Corporation

37 ANITA SPENCEQuest project manager, Shell Canada

Limited

41 RANDY MEYERVice-president, business development

and logistics, Altex Energy Ltd.

SEPTEMBER 2014 | OILSANDSREVIEW.COM 5

contentsVOLUME 9 | NUMBER 9 | SEPTEMBER 2014

Rail guy from the beginningRandy Meyer is pleased to have been proven right about

crude by rail

By Melanie Collison

Randy Meyer used to get laughed out of the room when he talked about the

benefits of crude by rail. But today, thanks first to the momentum brought by

pipeline constraints and then to the recognition of sound economics, the practice

is widespread and expanding. Meyer—one of the original pioneers of crude by

rail—is happy to have been proven right.

RANDYMEYER

VP, business development

and logistics, Altex

Energy Ltd.

PH

OTO

: TO

DD

KO

RO

L

FACES OF THE O IL SANDS 2 014

SEPTEMBER 2014 | OILSANDSREVIEW.COM 41

It was a discouraging 14 months until he got the National Post ’s

Diane Francis interested.

The guest speaker at a CN sales meeting, Francis was la-

menting the lack of a pipeline to the West Coast. “I told her we

do have a pipeline—called rail,” Meyer says. She wrote columns

touting the economics of rail and its ability to decouple Canadian

oil prices from American control.

“That’s what broke the ice jam; people started to realize we

had something.”

That “something” is growing quickly. Crude by rail offloading

capacity from western Canada was essentially zero in 2011.

According to the most recent analysis by Peters & Co. Limited,

capacity has risen past 500,000 barrels per day and is expected

to exceed one million barrels per day by the end of the year.

In North Dakota, producers are already transporting nearly one

million barrels of crude per day by rail—up from essentially noth-

ing in 2010.

In 2012, Meyer left CN for Altex, where he’s responsible for

sales and marketing, the development of crude oil rail loading and

unloading terminals in Canada and the United States, and the

logistics systems to manage them.

As the rail guy who was there from the beginning, scoping the

opportunity with the Alliance Pipeline founders, Meyer is gratified

that crude by rail is now widely accepted. “Before us nobody was

even talking about it,” he says.

Still, he grapples with frustration because some media and

politicians perpetuate myths and misstate facts.

“The media and government are in love with pipelines. It’s wrong

for government to promote one industry over another,” he says.

In the end, he is sure the future will be bright for crude by rail

because “pipe capacity goes way up [for light oil] if you take out

the heavy oil blocking it.”

In 2008, as business development lead for Canadian National

Railway Company (CN), he was working crude by rail in corpor-

ate boardrooms across the heavy oil sector. His main message:

oil companies were seriously underestimating the diluent penalty

blended into the cost of pipelining crude.

“People did not understand the economics or capabilities of

rail,” says Meyer. “We hit a brick wall. People were entrenched.

CN was getting impatient.”

Meyer had a long history of opening doors at CN. In the 1970s,

he put himself through school working for the company. When he

signed on full-time, he was promoted into information technology

then moved into market analysis and sales.

Recognized as being entrepreneurial, he became the archi-

tect of CN’s long-term business development strategy in western

Canada, which primarily related to the petroleum industry.

Meyer’s original plans hinged on opportunities relating to the

multiple new bitumen upgrading facilities planned for Alberta’s

Industrial Heartland.

But one by one, the tenants of upgrader alley toppled, so he

turned in a new direction: crude by rail.

In retrospect, it seems obvious. Crude by rail operations are

bringing millions of dollars per year in new business to CN and

other operators, and the practice is growing strongly, but it had a

slow start.

“In November 2007, the guys from Altex Energy Ltd. ap-

proached me at CN,” Meyer explains. “They were the people who

built the Alliance Pipeline—the original Keystone idea. They pro-

posed a pipe that eliminated the diluent penalty, but they needed

parties with pure bitumen to ship. Their idea was to use rail as a

bridging mechanism until they got the pipe built.

“We realized rail was cheaper than even this pipeline. I started

trying to convince CN, but everybody thought I was crazy.”

“The media and government are in love with

pipelines. It’s wrong for government to promote one

industry over another.”

42 OILSANDS REVIEW | SEPTEMBER 2014

FACES OF THE O IL SANDS 2 014