Petro-Canada begins work on oilsands plant

Petro-Canada, Calgary, has begun construction of its $290 million (Can.) McKay River oil sands plant, 36 miles northwest of Fort McMurray, Alta. The company has also applied for a production increase to 30,000 b/d from an already approved 22,000 b/d. The plant is scheduled to go on stream in 2002.


CALGARY�Petro-Canada, Calgary, has begun construction of its $290 million (Can.) McKay River oilsands plant, 36 miles northwest of Fort McMurray, Alta. The company has also applied for a production increase to 30,000 b/d from an already approved 22,000 b/d. The plant is scheduled to go on stream in 2002.

Capital and operating costs are estimated at $10 bbl. The company also assessing the potential of its in situ oilsands leases inventory to increase production to 80,000 b/d by the end of the decade.

Petro-Canada is also studying the possibility of integrating its refinery at Edmonton to upgrade and refine 80,000-150,000 b/d of bitumen from McKay River into gasoline. The company will install new sulfur reduction equipment at the refinery by 2004 that will be designed so that it could later form part of a bitumen upgrading process.

CEO and Pres. Ron Brenneman said the company would take a deliberate, step-by-step approach to its oilsands development.

He said the oilsands represent a key resource for Alberta as conventional oil production will decline over time. �Petro-Canada is uniquely well positioned to play a major role in this growth industry, given our strong inventory of potential producing properties, our expertise in leading edge in situ oilsands technology, and the significant value that may be created through integration with our refinery in Edmonton,� Brenneman said.

�We are taking a staged, disciplined approach. Each phase of development will be carefully evaluated to confirm its economic attractiveness as market conditions evolve.�

The McKay River plant will use steam-assisted gravity drainage technology to produce bitumen from oilsands using pairs of steam injection and production wells drilled horizontally into the oil-bearing formation. The technology has been successfully tested for 10 years at a pilot plant.

The company has also reached an agreement with Enbridge Inc., Calgary, for Enbridge to build a $55 million, 25-mile pipeline to connect McKay River bitumen to the Athabasca Pipeline for sale on the North American market.

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