August 15, 2005

Shell Canada oil sands expansion cost increase 83 per cent

Fort McMurray, Alberta – Shell Canada has increased its estimated cost for expanding its Athabasca Oil Sands Project from $4 billion to $7.3 billion, as reported by the Green Car Congress. The project expansion will increase production from 200,000 barrels per day to 300,000.

The bitumen is extracted and sent via a pipeline to the Scotford Upgrader in Fort Saskatchewan, Alberta. After upgrading the heavy bitumen to lighter oil, the product is sent to refineries. Shell Canada estimates that for its first expansion, including the common infrastructure required to support subsequent expansions, cost could be up to $200 per annual barrel of production. Even shared across the total volume of subsequent planned expansions, costs work out to $66.67 per annual barrel of production.

The Athabasca Oil Sands Project consists of the Muskeg River Mine north of Fort McMurray, and the Scotford Upgrader located near Edmonton. It is a joint venture of Shell Canada Limited, Chevron Canada Limited and Western Oil Sands L.P. Overall, the Canadian Association of Petroleum Producers expects about $45 billion to be invested in the oil sands between now and 2010.

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