By OGJ editors
HOUSTON, Aug. 1 -- Shell Canada Ltd., operator of the Athabasca Oil Sands Project (AOSP), has issued a proposal to joint venture partners Chevron Canada Ltd. and Western Oil Sands LP to proceed with the project's 100,000 b/d expansion. The partners have 90 days to respond.
This expansion project is part of Shell's plans to increase mining production from the Athabasca region to 550,000 b/d of oil (330,000 b/d net).
Shell has already completed an extensive feasibility study and a cost estimate and assurance review process for the expansion. The company said the heated markets for labor, materials, and equipment have impacted all facets of the Expansion 1 project and cost estimates, which have increased greatly from earlier estimates, are now expected to be about $275-350/bbl/year.
But despite the capital intensity of the project, Shell said Expansion 1 remains viable under a wide range of pricing scenarios. It intends to make a final investment decision for this project in the fourth quarter, pending regulatory approvals.
The Expansion 1 project is a fully integrated expansion of existing AOSP facilities, including the Muskeg River Mine, 75 km north of Fort McMurray, Alta., and the Scotford upgrader, northeast of Edmonton. It also includes construction of common infrastructure that will be sized to support future expansions.
Shell said the planned solvent deasphalting plant is not included in Expansion 1 because the technology does not yet allow integration into the upgrading process. Expansion 1 expenditures will be similar between the mine and the upgrader, Shell said.
Shell expects bitumen production to start in late 2009 followed by upgrader production in late 2010.
