Hi Den;

You are correct. There is no mention of a pipeline being built in the future to service POD1 and Algar. There is also no mention of expanding the MRCI Refinery in Montana to keep up with the increased bitumen output from Algar and the 24,000 bbl/d of bitumen production from the expansion at Algar. Nor is there any mention of expanding Connacher's natural gas production to offset the amount of natural gas to be consumed at Algar, by the 24,000 bbl/d expansion project and by the co-generation plant. Yet we know from past discussions that this is all on management's mind.

I have stated before that the pipeline can be built by a pipeline company from POD1/Algar to the main diluent pipeline in the region with a tariff charged to Connacher for the pipeline parts and construction. Once the pipeline is completed Connacher would then be charged a tariff on each barrel of dilbit shipped through the pipeline each year for say five years or whatever and once the tariff has equalled the cost, the pipeline company would turn over the pipeline to Connacher forever at no further cost, so that the pipeline's future maintenance would become Connacher's problem.

I agree with you Den that the big problems in the future are still:

1) the $850 million dollar debt;

2) comining up with the $600 million dollars to pay for the expansion to Algar.

I recall that Connacher management recently stated (I believe it was in either the last conference call or on one of Connacher's recent webcasts that Pete Sametz stated that the expansion and increased bitumen production from it will significantly reduce Connacher's production costs to produce each barrel of bitumen from the $19 to $20 dollars per barrel of bitumen that it currently costs Connacher (without future Algar bitumen production or the expansion bitumen production included in this curent cost) ; which will end up being reduced to $9 to $10 dollars per barrel average cost of bitumen approximately to produce once they are producing 44,000 bbl/d of bitumen.

In addition, Connacher in the near future expects to be coinjecting natural gas and solvents into the underground chambers at POD1 and Algar in the near future which in addition to the installation of the high temperature electric submersible pumps in the underground wellpairs will lower the SOR's and the operating costs and the cost to produce each barrel of bitumen:

"attractive steam/oil ratios ("SOR") for its oil sands operations, assisted and enhanced by continuing technical innovations which the company has introduced or plans to introduce. These include the use of high temperature electrical submersible pumps, natural gas coinjection and SAGD plus, using solvents with steam to enhance well productivity and recoveries"

http://www.theglobeandmail.com/globe-investor/news-sources/?date=20100622&archive=cnw&slug=C6993

So, in the great scheme of things if, and I must emphasize "IF", Connacher can reduce it's production costs for each barrel of bitumen to $9.00 or $10.00 per barrel of bitumen, then Connacher may theoretically have some chance of significantly increasing its cashflow to pay down debt and raise the capital needed for the expansion. Perhaps someone who is good with financial numbers could run a simulation with these reduced production costs to see if there is any hope that Connacher will ever be able to produce enough capital internally to pay for the 24,000 bbl per day expansion in addition to paying down the debt. There is also the possiblity of Connacher refinancing it's debt in two or three years to lower it's interest rates on it's debt and extend the payback period over 25 years. However, with all of these "if's" I agree with many of you that the risk involved and the chances of these "if's" coming to pass are becoming less and less probable each day.

Cheers; Scott