Canadian junior eyes first US oil sands project

Cuppa US: US Oil Sands raises $11 million


Luke Johnson 

25 May 2012 19:52 GMT

Toronto-listed US Oil Sands has closed on an $11 million private placement that will help the junior explorer fund development of what would be the first commercial oil sands project in the US.

The PR Spring Commercial Bitumen Mining Project is located in the Uinta basin in eastern Utah.

“These initial funds will allow us to initiate construction on our PR Spring project, the first commercial oil sands extraction project in the US,” chief executive Cameron Todd said in a statement.

US Oil Sands said it expects to begin preparation work this summer, with installation and field construction set to begin in the middle of next year.

The company said it has already issued work orders for fabrication of long-lead equipment.

Production at the first 2000-barrel-per-day phase is expected to start up in the fourth quarter of 2013.

The first phase will cost $30 million to construct, US Oil Sands said, with each additional phase coming with a $25 million price tag.

US Oil Sands will employ proprietary technology that uses a “bio‐solvent” to extract the bitumen from oil in a process the company says has a “low environmental impact”.

The process eliminates the need for tailings ponds and allows for “rapid mine reclamation”, the company says. It also says it can recover 96% of the bitumen from the sands and all but 1% of the solvent while recycling 95% of the water used in the extraction process.

Still, environmental groups worry about threats the project might pose to groundwater. The Utah Water Quality Board, which has heard arguments about potential pollution threats, is expected to make a ruling on the project later this year, according to the Associated Press.

US Oil Sands holds 32,005 acres in the Uinta basin. The PR Springs project will take up a 5930-acre block with 190 million barrels of independently-verified discovered resources, according to a presentation on the company’s website.

The company hopes to average 50,000 bpd of production over the next 10 years.

It has also opened a data room and has invited “a number of potential partners” to consider participating in the PR Spring project.