Does Koch Industries hold most Canadian oil sands leases? It’s complicated.

A March 20 Washington Post Web article and a March 21 print article stated that Koch Industries was the largest leaseholder in Canada’s oil sands. Further reporting has indicated that Koch Industries on a net acreage basis is the largest American and foreign holder of leases in Canada’s oil sands but it might narrowly trail two Canadian companies overall.

Based on data from the Alberta provincial energy department, corporations’ annual information forms, information from a mapping firm called GeoScout, data from a Calgary-based exploration services firm called Divestco Geomatics and interviews with industry analysts and executives, here is a list of individual companies’ net acreage lease holdings in oil sands:

Cenovus Energy (Canada) 1.57 million* (includes rights to an air weapons range)

Athabasca Oil Corp. (Canada) 1.56 million**

Koch (U.S.) 1.12 million to 1.47 million***

Canadian Natural Resources (Canada) 1 million*

Suncor (Canada) 986,000****

Sources:

*company filings with
Canadian securities regulators;
e-mails from company spokesmen

**company Web site:
atha.com/operations/
thermal-oil/

***GeoScout, Alberta
energy department, Divestco

****Divestco

An oil industry official with direct knowledge of Koch’s lease holdings, who spoke on the condition of anonymity to protect his relationship with the firm, has said that Koch’s leases in the oil-sands region are “closer to 2 million.” This is possible because big companies frequently use brokers or private affiliates to quietly buy rights without triggering a scramble for nearby acreage. If that is the case, Koch Industries ranks as the largest leaseholder in Alberta.

Koch did not reply to questions about its acreage holdings.

Even without counting possible acreage acquired through such means, what’s clear is this: Koch Industries through its wholly owned subsidiaries ranks as the largest leaseholder among U.S. or non-Canadian firms and no lower than the third-largest overall.

Figuring out net acreage positions and rankings in the oil-sands region is complicated, so a measure of uncertainty is unavoidable. “It’s so opaque,” said Andrew Leach, a professor at the University of Alberta in Edmonton. “There are so many different layers here.”

Here are some of the best and most frequently cited sources of information:

The Alberta provincial government’s Department of Energy figures

The province of Alberta keeps track of designated representatives on oil-sands leases, but the list doesn’t indicate whether those representatives have partners who share the cost of purchase and development. It is a list of gross, not net, lease holdings. Net ownership could be higher (if a company holds a lot of minority positions in partnerships) or lower (if a designated representative brings in other partners to reduce development costs and spread risks).

Moreover, Canadian government and industry officials note that any company can establish a subsidiary identified only with a number, such as 12345Alberta, and the authoritative industry official says that Koch’s holdings far exceed the acreage listed by name with the Alberta provincial government. Other oil companies might be doing the same thing, adding another element of uncertainty.

In response to a request from The Post, the Alberta provincial energy department released a list of the five companies with the biggest numbers of gross acres for which they are designated representatives:

Canadian Natural Resources 2.47 million acres

Cenovus Energy 1.42 million acres

Suncor Energy 1.24 million acres

Koch Oil Sands Operating 1.12 million acres

Sunshine 0.96 million acres

The companies’ figures

In “annual information forms” (AIFs) submitted by public Canadian companies to securities regulators, two of those Canadian companies said their net holdings are substantially smaller.

Canadian Natural Resources 1 million net acres

Cenovus Energy 1.09 million net acres

In the case of Cenovus Energy, the lower net number does not include separate exclusive rights to 478,000 net acres on the Cold Lake Air Weapons Range, a Canadian air force base and fighter pilot training ground. Cenovus already is producing oil in that area. A Cenovus spokesman said the company uses a more representative figure of 1.5 million acres when it makes presentations to investors.

Canadian Natural Resources confirmed its AIF figures in e-mail responses to Post queries.

Suncor does not disclose net acreage figures in filings with Canadian regulatory agencies, and a spokeswoman said she was still looking into it.

The Canadian public company called Athabasca Oil Corp. says on its Web site that it owns 1.5 million net acres in oil sands. An official at the Alberta provincial energy department could not explain why the company does not appear on its list of biggest oil-sands leaseholders. Note: This company is separate from and unrelated to the Athabasca Oil Sands Project, a joint venture led by Shell.

A mapping service

A mapping service called GeoScout has compiled figures for Koch that indicate that it has 1.47 million net acres of leases.

Separating natural gas leases from oil-sands leases

Another complicating factor in compiling leasehold data on oil sands is that some of the land leased in northern Alberta is for conventional natural gas.

Canadian Natural Resources says in its annual report filings that much of its acreage is in northwest Alberta, which is a conventional natural gas area. The company says in those filings (and reaffirms in e-mails) that its gross acreage position in oil sands is only 1.1 million acres, less than half the figure given by the provincial energy department.

The distinction between natural gas and oil-sands leases helps explain the figures Cenovus Energy uses in its annual information filings with Canadian regulators. In that filing, Cenovus said it has 1.814 million net acres in its oil-sands lease holdings. That includes 725,000 net acres of natural gas lands within the oil-sands region, a company spokesman said, but excludes the Cold Lake Air Weapons Range.

An exploration services firm’s estimates

Terry Steinkey of the Calgary-based exploration services firm Divestco draws up maps and generates data for the oil industry using a CAD data set he maintains “religiously” and updates every two weeks. He provided The Post with these figures for net acreage in oil sands, not including conventional oil or natural gas:

Canadian Natural Resources 2.74 million

Athabasca Oil Sands 1.56 million

Koch 1.20 million

Cenovus 1 million

Suncor 985,947

Sunshine 938,997

Husky 741,313

Exxon Mobil/Imperial 627,645

Grizzly 590,580

MEG Energy 583,166

Devon Energy 484,325

Shell Oil 462,085

ConocoPhillips 434,904

Those figures omit minority partners in joint ventures. Steinkey gave a figure for Cenovus of only 1.0 million net acres because he did not include the rights Cenovus holds for oil-sands extraction in the Cold Lake Air Weapons Range. He said the huge discrepency between his Canadian Natural Resources estimate and the figure the company filed with Canadian securities regulators was likely the result of non oil sands leases in the larger totals.

Steinkey cautioned, however, that there are additional margins for error. Some parcels his dataset analyzes are “split” because there might be two or more oil sands formations, each owned by different companies, on the same parcel of land. Athabasca Oil Corp., for example, shares 10 sections of land with another player, he said. He said that in about 5 percent of oil-sands leases, companies do not bid for all the potentially producing formations.

Juliet Eilperin contributed to this report.

Steven Mufson covers energy and other financial news.
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A March 20 Washington Post Web article and a March 21 print article stated that Koch Industries was the largest leaseholder in Canada’s oil sands. Further reporting has indicated that Koch Industries on a net acreage basis is the largest American and foreign holder of leases in Canada’s oil sands but it might narrowly trail two Canadian companies overall.

Based on data from the Alberta provincial energy department, corporations’ annual information forms, information from a mapping firm called GeoScout, data from a Calgary-based exploration services firm called Divestco Geomatics and interviews with industry analysts and executives, here is a list of individual companies’ net acreage lease holdings in oil sands:

Cenovus Energy (Canada) 1.57 million* (includes rights to an air weapons range)

Athabasca Oil Corp. (Canada) 1.56 million**

Koch (U.S.) 1.12 million to 1.47 million***

Canadian Natural Resources (Canada) 1 million*

Suncor (Canada) 986,000****

Sources:

*company filings with
Canadian securities regulators;
e-mails from company spokesmen

**company Web site:
atha.com/operations/
thermal-oil/

***GeoScout, Alberta
energy department, Divestco

****Divestco

An oil industry official with direct knowledge of Koch’s lease holdings, who spoke on the condition of anonymity to protect his relationship with the firm, has said that Koch’s leases in the oil-sands region are “closer to 2 million.” This is possible because big companies frequently use brokers or private affiliates to quietly buy rights without triggering a scramble for nearby acreage. If that is the case, Koch Industries ranks as the largest leaseholder in Alberta.

Koch did not reply to questions about its acreage holdings.

Even without counting possible acreage acquired through such means, what’s clear is this: Koch Industries through its wholly owned subsidiaries ranks as the largest leaseholder among U.S. or non-Canadian firms and no lower than the third-largest overall.

Figuring out net acreage positions and rankings in the oil-sands region is complicated, so a measure of uncertainty is unavoidable. “It’s so opaque,” said Andrew Leach, a professor at the University of Alberta in Edmonton. “There are so many different layers here.”

Here are some of the best and most frequently cited sources of information:

The Alberta provincial government’s Department of Energy figures

The province of Alberta keeps track of designated representatives on oil-sands leases, but the list doesn’t indicate whether those representatives have partners who share the cost of purchase and development. It is a list of gross, not net, lease holdings. Net ownership could be higher (if a company holds a lot of minority positions in partnerships) or lower (if a designated representative brings in other partners to reduce development costs and spread risks).

Moreover, Canadian government and industry officials note that any company can establish a subsidiary identified only with a number, such as 12345Alberta, and the authoritative industry official says that Koch’s holdings far exceed the acreage listed by name with the Alberta provincial government. Other oil companies might be doing the same thing, adding another element of uncertainty.

In response to a request from The Post, the Alberta provincial energy department released a list of the five companies with the biggest numbers of gross acres for which they are designated representatives:

Canadian Natural Resources 2.47 million acres

Cenovus Energy 1.42 million acres

Suncor Energy 1.24 million acres

Koch Oil Sands Operating 1.12 million acres

Sunshine 0.96 million acres

The companies’ figures

In “annual information forms” (AIFs) submitted by public Canadian companies to securities regulators, two of those Canadian companies said their net holdings are substantially smaller.

Canadian Natural Resources 1 million net acres

Cenovus Energy 1.09 million net acres

In the case of Cenovus Energy, the lower net number does not include separate exclusive rights to 478,000 net acres on the Cold Lake Air Weapons Range, a Canadian air force base and fighter pilot training ground. Cenovus already is producing oil in that area. A Cenovus spokesman said the company uses a more representative figure of 1.5 million acres when it makes presentations to investors.

Canadian Natural Resources confirmed its AIF figures in e-mail responses to Post queries.

Suncor does not disclose net acreage figures in filings with Canadian regulatory agencies, and a spokeswoman said she was still looking into it.

The Canadian public company called Athabasca Oil Corp. says on its Web site that it owns 1.5 million net acres in oil sands. An official at the Alberta provincial energy department could not explain why the company does not appear on its list of biggest oil-sands leaseholders. Note: This company is separate from and unrelated to the Athabasca Oil Sands Project, a joint venture led by Shell.

A mapping service

A mapping service called GeoScout has compiled figures for Koch that indicate that it has 1.47 million net acres of leases.

Separating natural gas leases from oil-sands leases

Another complicating factor in compiling leasehold data on oil sands is that some of the land leased in northern Alberta is for conventional natural gas.

Canadian Natural Resources says in its annual report filings that much of its acreage is in northwest Alberta, which is a conventional natural gas area. The company says in those filings (and reaffirms in e-mails) that its gross acreage position in oil sands is only 1.1 million acres, less than half the figure given by the provincial energy department.

The distinction between natural gas and oil-sands leases helps explain the figures Cenovus Energy uses in its annual information filings with Canadian regulators. In that filing, Cenovus said it has 1.814 million net acres in its oil-sands lease holdings. That includes 725,000 net acres of natural gas lands within the oil-sands region, a company spokesman said, but excludes the Cold Lake Air Weapons Range.

An exploration services firm’s estimates

Terry Steinkey of the Calgary-based exploration services firm Divestco draws up maps and generates data for the oil industry using a CAD data set he maintains “religiously” and updates every two weeks. He provided The Post with these figures for net acreage in oil sands, not including conventional oil or natural gas:

Canadian Natural Resources 2.74 million

Athabasca Oil Sands 1.56 million

Koch 1.20 million

Cenovus 1 million

Suncor 985,947

Sunshine 938,997

Husky 741,313

Exxon Mobil/Imperial 627,645

Grizzly 590,580

MEG Energy 583,166

Devon Energy 484,325

Shell Oil 462,085

ConocoPhillips 434,904

Those figures omit minority partners in joint ventures. Steinkey gave a figure for Cenovus of only 1.0 million net acres because he did not include the rights Cenovus holds for oil-sands extraction in the Cold Lake Air Weapons Range. He said the huge discrepency between his Canadian Natural Resources estimate and the figure the company filed with Canadian securities regulators was likely the result of non oil sands leases in the larger totals.

Steinkey cautioned, however, that there are additional margins for error. Some parcels his dataset analyzes are “split” because there might be two or more oil sands formations, each owned by different companies, on the same parcel of land. Athabasca Oil Corp., for example, shares 10 sections of land with another player, he said. He said that in about 5 percent of oil-sands leases, companies do not bid for all the potentially producing formations.

Juliet Eilperin contributed to this report.

Steven Mufson covers energy and other financial news.
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