Without any fanfare a Chevron Canada-operated oil sands project is shaping up, with an initial objective of about 100,000 barrels per day by 2015.
An appraisal drilling program of 80 to 100 wells is due to start this winter and will be accompanied by engineering, processing and other technical evaluation work, junior partner Western Oil Sands said in announcing it has exercised an option to take a 20 percent stake in the Ells River venture.
The project is about 30 miles northwest of Fort McMurray in northeastern Alberta and comprises about 75,000 acres.
Western President and Chief Executive Officer Jim Houck said his company’s participation “directly aligns with our vision to develop large, long-life hydrocarbon resources.”
“The project is a key stepping stone for Western as we continue to build our land and resource base to reach potential production of 150,000 to 200,000 bpd,” he said.
Western participation a result of Athabasca projectWestern and Chevron Canada each hold 20 percent of the Shell Canada-operated Athabasca project.
Under terms of that agreement the joint venture owners have rights to participate in any additional leases acquired by any one of the Athabasca participants within the region. Over the past two years the owners have expanded their land-holdings in the region that hold the potential to add to the resource based and eventually proved reserves.
Shell Canada, as well as evaluating a multi-billion dollar expansion of Athabasca, is considering its option for Ells River.
Alberta regulators gave conditional approval Aug. 30 for a 100,000 bpd addition to Shell Canada’s Scotford refinery near Edmonton, part of a possible C$12.8 billion undertaking to hike output at the Athabasca operation from 155,000 bpd to 500,000 bpd over the next 15 years.
Meanwhile, Chevron acquired five in-situ leases in the Ells River area at Alberta government land sales in August 2005 and January 2006, paying less than US$75 million.
The leases contained an estimated 7.5 billion barrels of oil-in-place, according to Chevron’s internal estimates, laying the groundwork for another mega-project.
Ritchie named vice presidentAs it moves from the mining operation at Athabasca into in-situ development Western has named Graig Ritchie as vice president of oil sands, with responsibility for in-situ initiatives.
He has 20 years experience in the oil sands with EnCana and Imperial Oil covering all aspects of production, engineering and market development.
Western is currently trying to regain some lost confidence among investors after making a commitment to spend US$45 million over the next four years exploring for oil in Iraq’s Kurdistan region.
There has been a flurry of speculation over recent weeks that activist shareholders, upset that Western has moved beyond its oil sands mandate without consulting them, have been plotting a change of management or the sale of the company.
The takeover talk, some of it focused on Chevron as the likely acquisitor, has seen Western shares experience a roller-coaster ride, although some analysts believe the rumors are groundless.