South Korea buys oil sands mine
South Korea intends on buying an oil sands mine in Cold Lake with a capacity of 250 million barrels.
The commerce ministry announced on July 2 that the purchase would be made official later this month, as part of its effort to secure South Korea’s oil needs. The purchase price is being kept confidential.
State-run Korea National Oil Corporation (KNOC) is expected to begin construction of a production facility in Cold Lake, with initial production in 2008, and full-scale operations to commence two years later.
The size of the deposits of the mine will allow for between 30,000 and 35,000 barrels of oil to be extracted per day for the next 20 years.
Oil sands, also referred to as tar or bituminous sands, are deposits of bitmen trapped in a mixture of clay, sand and water. In essence, they are sand or sandstone containing at least 10 per cent petroleum.
South Korea, the world’s fourth-largest crude oil importer, has to import all its crude oil needs to feed its economy, Asia’s fourth largest. The country currently produces 115,000 barrels of oil daily from local and overseas oilfields.
The commerce ministry said in an official statement that once production begins, it could noticeably raise the country’s oil output self-sufficiency level by around 1.2 percent. Seoul wants to raise the self-sufficiency level from around 4 per cent at present to 18 per cent in 2013.
The head of the ministry’s energy resources development headquarters, Kim Young-hak, said that if South Korea is able to buy more oil sands mines, it might consider setting up its own processing facility in Canada.
Canada has the world’s second-largest reserve of oil sands after Venezuela and is able to churn out 4.7 billion barrels of oil on an annual basis.
When oil prices were in the range of US$30 per barrel, the development of oil sands was practical since it takes $20-25 to refine them into oil. But this has changed because oil prices are hovering at around $70 per barrel.