Shell Canada targets long-range oil sands development, gets OK on Jackpine

Gary Park

Petroleum News Calgary correspondent

Shell Canada is putting the pieces in place to ensure it remains a big-time oil sands producer over the long haul.

It has received regulatory approval for its 200,000 barrels per day Jackpine project in northern Alberta, but doesn’t expect construction will start this decade.

Alberta’s Energy and Utilities Board and the Canadian Environmental Assessment Agency gave the green light Feb. 5 to Jackpine, that includes an oil sands mine, bitumen extraction plant, a cogeneration plant and water pipeline.

The approval came with 19 conditions, which Neil Carmata, Shell Canada’s senior vice president, oil sands, said were not unexpected and did not constitute showstoppers.

The cost and timing of Jackpine have yet to be set, although the project will run to several billion dollars, he said.

For now, Shell Canada and its partners, Chevron Canada Resources and Western Oil Sands, will focus their efforts on a C$2 billion program to expand their year-old Muskeg River project to 225,000 bpd once it achieves the current peak of 155,000 bpd. They are currently averaging about 84 percent of design capacity.

The expansion plans include C$1 billion to enlarge Shell Canada’s Scotford refinery near Edmonton to turn bitumen into synthetic crude.

When Jackpine proceeds it is expected to create 3,000 construction jobs and 400 to 500 permanent mine jobs.

The first phase of Muskeg was launched at a cost of C$5.7 billion, about C$1.9 billion over budget because Alberta’s overheated economy put a squeeze on skilled labor.

Carmata said the partners are confident they can bring their next phase in on budget and on schedule, having absorbed lessons from the first stage. In addition, the smaller project will be easier to manage and the infrastructure, such as highways and power lines, will be leveraged, he said.