ZT (Sep 22) Shell plans to spend $4-billion and double production at oil sands

[Calgary]

By PATRICK BRETHOUR
Wednesday, September 22, 2004 - Page B3
CALGARY -- Shell Canada Ltd. aims to spend $4-billion over the next six years to nearly double the output at its Athabasca Oil Sands Project, fleshing out its expansion plans as it prepares to submit a regulatory approval application next year.

And the project's target output could rise much sooner than that: The head of the Calgary company's oil sands division said yesterday that he is encouraged by the strong performance of the first stage of the project, enough that a year-long streak of the same may result in Shell boosting its estimate of what Athabasca can reliably produce.

In August, the project produced 182,000 barrels a day, the top end of its nominal capacity, and well above its design capacity of 155,000 b/d, based on the operations being up and running 85 per cent of the time.

"We hit a home run, with the bases loaded, last month," said Neil Camarta, Shell's senior vice-president of oil sands.

He said a year's worth of similarly strong results could lead the company to increase the 85-per-cent figure, boosting the designed output.

Shell's expansion plans call for bitumen production to rise to between 270,000 and 290,000 b/d by 2010.

A series of projects to eliminate production bottlenecks at its Muskeg River mine and Scotford Upgrader will allow the company to increase production to between 180,000 and 200,000 b/d over the next three years, with expansions adding another 90,000 b/d. Construction would start in 2006 and end in 2009.

The expansions, if approved and implemented, would bring the Athabasca project more than half-way to its long-term goal of 500,000 b/d.

Mr. Camarta said the regulatory application will likely be submitted in the first half of 2005.

Shell has a 60-per-cent stake in the Athabasca project, with Chevron Canada Ltd. and Western Oil Sands LP holding smaller interests. The two companies have the option to take part in expansions into additional oil sands projects in the Athabasca area.