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Environmental Group Claims Expansion of Big-Rig Deal After Translating Korean Reports
News Articles | New West Energy | Steve Bunk | October 15, 2010
Read the full article on the originating site
The Natural Resources Defense Council (NRDC) yesterday announced it translated from Korean fresh evidence of plans for a decade-long business relationship between Imperial Oil, principally owned by ExxonMobil, and Sunjin Geotec (SJG), the South Korean manufacturer prefabricating giant modules that will travel through Montana and Idaho to Imperial’s oil sands mining project in Canada. An Imperial Oil official denies the document’s accuracy.
Relying on English translations of media reports, press releases and a business prospectus, NRDC claims the two companies hope to continue their business relationship over five phases extending to 2020. According to the translations, if SJG meets its manufacturing performance targets and if Imperial Oil’s Canadian mining efforts are fruitful, the contract’s options to renew every two years could be exercised, amounting to a total value of $1.5 billion.
“It’s unfortunate that their office did not contact us,” Imperial Oil spokeman Pius Rolheiser said of NRDC. “We have no commitments beyond the current contract to manufacture the 200 modules.”
He said Imperial’s plans for its project in the Kearl Oil Sands of Alberta, which originally were to produce about 110,000 barrels of crude in each of three phases, are now being reworked. The initial phase is still scheduled to start in 2012, but the timing of future expansions is being reconfigured.
Imperial’s website indicate its Kearl holdings have a projected lifespan of more than 40 years.
“As to whether we would need modules in the future, yes,” Rolheiser said. “Have we made commitments for them? No.”
The author of the NRDC working paper, Bobby McEnaney of the group’s Lands and Wildlife Program, indicated the translations were not precise, and he had no incontrovertible evidence that all such modules would go to the Kearl project, the planned destination of the first 200 modules. Nor could he confirm that the entire contract would be exclusively for production of modules. He did not discount the possibility that SJG might manufacture ancillary mining equipment under the contract.
“The conclusions we’ve made are based on four, five, six, seven, eight sources, but it’s up to interpretation,” he said.
The one fact NRDC had confirmed, he insisted, is the contract’s potential value of $1.5 billion over five phases.
That figure, which had been mentioned earlier in Canadian media reports, aroused the attention of Idaho activist Borg Hendrickson, who subsequently contacted the NRDC.
McEnaney began with an Internet search for keywords such as “Exxon” and “Sunjin Geotec” using the Korean alphabet. He collected a wide selection of documents for translation.
“I think it’s kind of ridiculous that a Western-European group like NRDC has to be poking into these open-source documents to find out what’s going on,” he said. “The ExxonMobil project has lacked transparency from day one.”
McEnaney’s working memo contains a summary of an Oct. 3, 2009, SJG press release that announces the signing of the first contract with Imperial to make about 200 modules for a total fee of $250 million. It also summarizes media reports from an Exxon and SJG press event, which cite the $1.5 billion figure for a contract extending throughout the decade.
The NRDC’s translation summary of a business prospectus dated Feb. 18, 2010, prepared for SJG by Samsung Securities, reiterates the 10-year, $1.5 billion deal. The English summary concludes that SJG “is already in the process of attracting additional contracts for module orders from additional tar sands developers.”
Yet another translation of an SJG press release, dated March 3, 2010, indicates that production of the first modules for Imperial Oil has begun after a five-month engineering and tooling phase. The English summary states that SJG’s second phase of module production will commerce in 2012, subject to achievement of production deadlines.
An investment analysis of Sungjin Geotec released in August by the Hongkong and Shanghai Banking Corporation anticipates a $250 million order for oil sands equipment from ExxonMobil in the pipeline for the final quarter of 2010.
Rolheiser denied any agreement for a second or subsequent phase of the SJG contract. He said he could not speak to whether or why Sunjin Geotech would release such information.
McEnaney’s memo provides a paragraph from the March 3 press release:
McEnaney said none of the translated documents mention any specific transportation route for the modules.
The Idaho Supreme Court heard arguments Oct. 1 in a lawsuit, in which Hendrickson is a plaintiff, concerning oversized shipments of equipment planned by ConocoPhillips through Idaho and Montana on narrow and scenic U.S. Highway 12. Attorneys for Conoco submitted a motion Oct. 8 to the justices for issuance of an order on the court’s ruling prior to the release of its written opinion. The motion cited mitigation of financial losses to the company if the four oversized loads of equipment could be moved to Billings before the onset of bad weather.
Tagged with: nrdc, exxon mobil, korea, imperial oil, kearl, sunjin geotec
