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Originally Posted by bizaro86
That's a fair point. Water treatment definitely has huge scale benefits. I've worked on development of SAGD projects on both sides of the border, and as a citizen I think the AB water rules are better. Use that much water and it is responsible to recycle it.
I still think at a low enough SOR something Lindberg size works nicely. Connacher had huge reservoir problems and had a huge SOR - they never really got conformance. Even Athabasca SOR is much higher than Lindberg iirc.
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I totally agree about the marginal reservoir killing a bunch of these guys. The Sask rules around surface water usage and no recycle are mind boggling to me. I still believe you need a certain scale to absorb the fixed costs involved. You can go super lean but you probably leave a lot of opportunity on the table when you are barely treading water.
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Originally Posted by SeeGeeWhy
The commentary about the marginal reservoirs that smaller thermal operators face is telling. We might have an assload of resource, but it’s in poor reservoir, requires lot of energy to extract, and is a low quality product. These are physical realities that will make attracting new investment into these plays a major challenge, even if we had zero tax and unencumbered market access. Low EROI energy sources will always need to be subsidized by higher EROI energy sources if they are going to continue to be utilized. These don’t make good investments, by and large.
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The Tier 1 properties are where the majority of future growth will come from. No way you would build a project now with an SOR of 3-4 or higher, especially with ESG being a huge component of attracting capital going forward. Only the guys with low SOR will survive in the long term and even they will need to capture carbon at some point soon.