Shell adds to oil sands portfolio

Gary Park

Shell Canada’s growing belief in the future of Alberta’s oil sands was reflected in its recent decision to buy two leases from EnCana. Terms were not disclosed.

The leases are about 12 miles northwest of the Muskeg River mine, the core of the Athabasca project operated by Shell. Lease 9 holds an estimated 1 billion barrels of recoverable bitumen, enough to support a mine producing up to 100,000 barrels per day. Until more drilling is done, it is not known if Lease 17 has enough potential to make a mining project feasible.

Neil Carmata, Shell Canada’s senior vice-president of oil sands, said the “high quality resource fits well with our long-term plans to grow our Athabasca sands business.” Athabasca, a joint venture by Shell 60 percent, Chevron Canada 20 percent and Western Oil Sands 20 percent, come on stream at the start of 2004 and is moving progressively to its peak output of 155,000 bpd.

New drilling on property adjacent to the Muskeg River mine allowed Shell to boost its proven reserves by 8.5 percent to 651 million barrels.

The company has also received approval from a federal-provincial review panel to move ahead with a second mine at Athabasca.

The C$2 billion Jackpine Mine will not be in operation until 2010, but is aiming for 200,000 bpd.