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OIL SANDS SPENDING Shell, partners see price of Muskeg River expansion skyrocket

ALBERTA The cost of the first phase of the proposed Athabasca Oil Sands Project expansion is skyrocketing, SHELL ...



ALBERTA The cost of the first phase of the proposed Athabasca Oil Sands Project expansion is skyrocketing, SHELL CANADA of Calgary warned last week. The AOSP is owned 60% by Shell, 20% by WESTERN OIL SANDS and 20% by CHEVRONTEXACO. According to Western, costs will be up 50% from the $7.3 billion estimated as recently as August 2005, and that number was up from the original $4.0 billion figure.

One of the key factors facing the AOSP expansion, and many other large construction projects around the world, is the intense demand for construction labour, materials and supplies which have resulted in unprecedented increases in capital costs. This demand is further intensified in Alberta by the development of multiple oil sands projects, Western said in a press release.

The planned expansion is aimed at raising total output over the next decade to at least 500,000 bbl/day in three 100,000-bbl/day phases. Increased capacity at the Muskeg River mine north of Fort McMurray, the adjacent bitumen extraction plant and the Scotford upgrader near Fort Saskatchewan are all needed. Shell and its partners are reviewing all aspects of controlling the costs, while at the same time proceeding with front-end engineering work on the first phase.

The partners plan to make a final investment decision on the expansion by the end of the year. Additional information is available both at www.Shell.ca and www.WesternOilSands.com.


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