New oil sands mining operation planned for Alberta

Gary Park

For the first time in 21 years, Alberta now seems certain to welcome a third full-fledged oil sands mining operation — a C$3.8 billion venture headed by Shell Canada.

Retaining a 60 percent controlling stake, Shell has teamed up with Chevron Canada Resources and newly created Western Oil Sands, each acquiring 20 percent of the Athabasca Oil Sands Project. The two minority partners fill the void created by Australia’s Broken Hill Proprietary, which pulled out in April as its global business started reeling from the collapse of commodity prices and markets.

The three companies said a C$100 million feasibility study will be submitted to their boards of directors later this year. If the go-ahead is given construction could “begin immediately.”

Initial plans are to build a C$1.4 billion mine to produce 150,000 barrels per day of bitumen by late 2002, adding to the combined 700,000 barrels per day Syncrude Canada and Suncor are targeting for 2007.

The other components are a C$500 million pipeline from Fort McMurray in northeastern Alberta to Edmonton and a C$1.9 billion upgrading of Shell’s Scotford refinery complex.

Next in line for a major oil sands project is Mobil Oil Canada, which expects to file regulatory applications in the second quarter of 2000 for its C$2.5 billion Kearl River plant in northern Alberta.

Although planning was slowed by last year’s low oil prices, Mobil is reviewing its original plans and may now boost initial output to 160,000 barrels per day from 100,000 barrels per day, starting in 2005.