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Innovation

Eyeing oil sands, French firm Total buys Canada's UTS Energy

French oil conglomerate Total will buy Canadian oil sands developer UTS Energy for $1.42 billion. At stake: undeveloped hydrocarbon resources in the north.
Written by Andrew Nusca, Contributor

French oil conglomerate Total SA said on Wednesday that it will buy Canadian oil sands developer UTS Energy Corp. for $1.42 billion.

Total previously twice attempted to take over UTS Energy, which specializes in the exploration, development and monetization of Canada's hydrocarbon resources.

In particular, Total's interest is in UTS Energy's work with mineable oil sands deposits from the Athabasca Oil Sands Area in northeastern Alberta. It will receive a 20 percent stage in the company's Fort Hills mining project.

In addition to receiving cash from Total, UTS Energy shareholders will also get shares in a new, publicly traded company called SilverBirch Energy Corp., which will handle UTS's 50 percent interest in its Frontier and Equinox oil sands mining developments, interests in exploration oil sands leases and undeveloped lands.

So why all the interest in oil sands? The area in question in Alberta -- about the size of Florida, the Wall Street Journal estimates -- contains viscous, black bitumen that can be converted into crude oil.

In fact, there's enough of it to make the region the world's second-largest oil reserves behind Saudi Arabia.

Total's interest is as much about moneymaking as it is competition -- Suncor Energy, Canadian Natural Resources and Imperial Oil (majority-owned by Exxon Mobil) are all active in the area.

Suncor has a 60 percent stake in the Fort Hills project. Another 20 percent is held by Teck Resources.

Estimates put Fort Hills' resources at about 3.4 billion barrels of bitumen, which will be recovered through open-pit mining. The first phase of the project is expected to yield 160,000 barrels per day and will begin production in 2015 or 2016, Total said.

This post was originally published on Smartplanet.com

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