ESSO TO DEMOTHBALL PART OF HEAVY OIL PROJECT

Dec. 24, 1990
Esso Resources Canada Ltd. plans to spend about $25 million to reactivate a segment of a mothballed heavy oil recovery project at Cold Lake, Alta. Phases 7 and 8 of the project, part of a larger Cold Lake steam injection operation, were essentially completed for $220 million in 1988 but shut in by low oil prices. The timetable calls for steaming to begin next March. Production from the demothballed phases is to reach about 14,500 b/d by third quarter 1991 and peak at 20,000 b/d early in 1992.

Esso Resources Canada Ltd. plans to spend about $25 million to reactivate a segment of a mothballed heavy oil recovery project at Cold Lake, Alta.

Phases 7 and 8 of the project, part of a larger Cold Lake steam injection operation, were essentially completed for $220 million in 1988 but shut in by low oil prices.

The timetable calls for steaming to begin next March.

Production from the demothballed phases is to reach about 14,500 b/d by third quarter 1991 and peak at 20,000 b/d early in 1992.

Phases 7 and 8 cover about 240 wells, steam generating plant, steam distribution and bitumen collection system, and a central processing plant. The company cited higher oil prices and improved technology as reasons for bringing the facilities on production.

Cold Lake Phases 9 and 10 will remain deferred. Their start-up would cost $80-90 million.

Esso predicts total production from its Cold Lake development will reach 100,000 b/d when the reactivated segment is on stream, taking into account normal decline of existing production. Most of the product is sold on the U.S. Midwest asphalt market.

OSLO PROJECT

Meantime, backers of the $4.5 billion OSLO oil sands project in northern Alberta are banking on provincial government aid to get the project under way.

Esso Resources Canada Ltd. is the lead partner for the proposed development on leases in the Fort McMurray area. About $140 million has been spent on preliminary engineering.

OSLO executive John Lynn said companies will need oil prices of more than $30 (U.S.)/bbl for the 77,000 b/d operation on the basis of current cost, tax, and royalty levels.

Lynn agreed with a National Energy Board estimate that the project could be delayed until 1999 at the earliest. But he said that estimate does not consider the possibility of provincial help.

The federal government this year withdrew a promise of financial aid of more than $1 billion. Lynn said that has delayed plans by about 1 year. The schedule now calls for a decision in time to begin construction in 1992.

Alberta Energy Minister Rick Orman said negotiations on the project are under way between the provincial government and six lessees on a variety of options. He said the government, which holds a 10% interest in the project, might put more money into it.

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