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Oil Sands Production Projects At A Glance

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20 Oil & Gas Netwo rk, December 2008

According to Albertas Depar tment of Energy, the Provincecontains the second largest proven con centration of oil

in the world, the vast majority of which is found in oil

sands deposits. There are 173 billion barrels of oil in the oil

sands proven to be recoverable with todays technology and

under current economic conditions. In addition, there is an

estimated total of 315 billion barrels of potentially recoverable

oil in the oil sands. The oil

sands are a key driver of the economy in Alberta, other

provinces and at a national level. Here is a glimpse of recent

developments and future plans for some of the major projects.And since the bitumen found in those oil sands needs to be

upgraded and then piped to market, the latest in whats hap-

pening on those fronts is also included. The following infor-

mation was gathered from various web sites, public disclosure

documents, news releases and news clippings and is believed

current as of Oct. 30,2008.

Athabasca Oil SandsShell Canadas 100,000 barrel-a-day expansion of bitumen

mining and upgrading facilities is underway.

The Athabasca Oil Sands Expansion is a pro ject that h as cre-

ated about 6,000 jobs during peak p eriods.

Shell Canada Limited, the operator of the Athabasca Oil

Sands, owns a 60 percent share, while Chevron and Marathon

Oil Sands each own 20 percen t.

This phase of expansion includes construction of mining

and extract ion facilities at th e Jackpine Mine, expansion of froth

treatment facilities at the existing Muskeg River Mine andexpansion of the Scotford Upgrader.

The Corridor Pipeline links the facilities.

Muskeg River is about 75 kilometres north of Fort McMurray

and the expansion of the Jackpine mine is just east of that

operation. The Jackpine Mine Expansion will bring production

at that mine up to 300,000 barrels a day.

While these expansions take place with a proposed com-

pletion date of 2010, partners in the Athabasca Oil Sands Project

are looking ahead to more growth in the future.

Shell has announced that it wants to eventually bring pro-

duction up to 770,000 barrels per day, but also said it will

complete th e cur rent Athabasca expansion before deciding onthe second . Originally, a decision was going to b e made in 2009.

Future proposals include expanding the Pierre River Mine

production base by 200,000 bbl/d. The expansion includes min-

ing and bitumen processing extended to the west side of the

Athabasca River,

Shell has also applied to the Alberta Energy and Utilities

Board and Alberta Environment for approval to construct and

operate Scotford Upgrader 2 adjacent to Shells

existing Scotford facilities near Fort

Saskatchewan.

The prop osed Scotford

Upgrader 2 would

be constructed in

four phases

and process

Shells

share of futureAthabasca mineable

bitumen production as

well as bitumen from the

companys in situ oil sands

developments.

Scotford Upgrader 2 could ulti-

mately process up to 400,000 barrels-

a-day of oil sands bitumen into a range of

synthetic crude oil products.

EnCana Corp./ConocoPhillipsOilsands have become such a large part of EnCana

Corporation that the company had planned to split into

two independent energy companies, with one to focus on

unconventional resources.

But given what the company is calling uncertainty in the

global financial markets, EnCana has decided to delay the tim-ing of a shareholder vote, originally planned for Decembe r, until

clear signs of stabilization return to the markets.

The integrated oil company was to have taken on expan-

sions at the Christina Lake and Foster Creek oilsands projects

in Alberta.

Located in northeast Alberta about 120 kilometers south of

Fort McMurray, Christina Lake has the potential to be EnCanas

largest oilsands project. It is estimated by EnCana to have an

unbooked resource potential of about 1.8 million barrels of oil.

A current expansion is expected to take production to

about 18,000 barrels per day in 2008 on a gross basis and the

project is targeted to grow to approximately 19per day on a gross basis over the next decade.

One hun dred pe r cent of EnCana's oilsands o

in-situ.

EnCana has a 50/50 partnership with Conoco

the Foster Creek and Christina Lake projects. EnC

erator of the upstream por tion and ConocoPhillip

the down stream (refining) portion.

The assets hold independently estimated reco

men of more than 6.5 billion barrels, and the partn

is to increase production from the current 50,00

day (bbls/d) to 400,000 bbls/d of b itumen by 201

In September 2008 EnCana received the final

its Wood River re finery Coker and Refiner y Expan

project in Illinois. Construction is now underway

grated oil venture with ConocoPhillips. The pr

mated to cost roughly $1.8 billion (U.S.) net to E

billion gross) and is expected to be completed o

three years.The company is also continuing with developm

its newest initiatives to improve p roduction and low

oil ratio: wedge w ells. A portion of t he reservoir (w

ed by proximity to the steam chamber and the we

a considerable amount of bitumenthat can be

EnCana plans to try the procedure at Chri

2009.

The regulatory process for EnCanas

sands project also continues to move

One of Borealis is in the northern p

oilsands area, about 90 kilometre s

Fort McMurray. EnCana holds a

interest in the proposed pr

of approximately 36 s

Phase

One wi l l be

capable of producing

35,000 bbls per day over 25 years.

Fort HillsWhile the Fort Hills Energy Limited Partne rship

in September 2008 that estimated costs for its Fort

have risen considerably, it also says the partners

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committed to the project.

The Fort Hills Project consists of an integrated oil sands

mine and bitumen extraction p lant 90 kilometres north of Fort

McMurray and an upgrader in Sturgeon County northeast of

Edmonton.

The Fort Hills partners - Petro-Canada with a 60 per cent

working interest, UTS Energy Corp. with a 20 per cent interest

and Teck Cominco Ltd. with a 20 per cent interest - are assess-

ing a range of options to reduce or defer capital costs.

Fort Hills is now expected to cost about $23.8-billion to

build, up from a June 2007 estimate of $14.1-billion.The major increases are costs associated w ith construction

materials, labour, project management and engineering.

Fort Hills is developing a definitive cost estimate, to be the

basis for a final investment decision planned by the partners

for the fourth quarter of 2008.

Proceeding with the Fort Hills Project is also subject to cer-

tain regulatory approvals being received. Fort Hills is working

with the regulators and various stakeholders to obtain the nec -

essary approvals.

Fort Hills is one of the largest remaining undeveloped oil

sands leases in the Athabasca region. The project has approval

for the production of up to 190,000 barrels per day of bitumen.

The bitumen resource has an estimated 4.7 billion barrels

(estimated by Sproule Associates Limited, Oil and Gas

Consultants in 2006).

Original plans were for the first phase to p roduce 140,000

bpd of synthetic crude oil. The project would also producebitumen (expected to be about 160,000 bpd) and previous

plans have included a start up in the fourth quarter of 2011

with the first synthetic crude oil coming from the Sturgeon

upgrader in the second quarter of 2012.

Horizon ProjectFirst steam on Canadian Natural Resource s Limited (CNRL)

Horizon Project took place in September 2008.

The Horizon Project is the largest capital project in

Canadian Naturals history at $ 9.47 billion, about eight per cent

above the previous estimate and 36 per cent higher than or ig-

inally estimated back in 2004.

Phase I will deliver 110,000 barrels per day. The company

says there will be virtually no decline in production for 40

years since there are an estimated six to eight billion bar-

rels of oil on the lease.

The Horizon Project involves moving raw oil-

sands materials through a com plex processto yield raw bitumen crude oil and then

upgrading it to 34 API, light sweet

synthetic crude o il.

The oil will be

sh ipped through

the Keystone

Pipeline,

with

CanadianNatural maintaining

full ownership of the re-

source through the pipeline.

The Horizon Project is locat-

ed about 70 kilometres north of

Fort McMurray. The project has a

fly-in and fly-out camp. The airstrip

on the Horizon site allows workers to

commute from the Atlantic provinces.

CNRL is planning for fut ure ex pansions

and has already received the t wo coke dru ms

and all components for the two hydrotreating reactors that will

be installed as part of the Phase 2/ 3 expansion.

JackfishDevon Energy Corporation is now working on

sands project near Conklin, Alberta.

Devon Energy has received regulatory approva

panys second oil sands project in Canada. Constr

100 per cent Devon-owned Jackfish 2 proje

September.Once fully operational in 2012, J

produce about 35,000 barre

day through Steam Assi

Drainage (SAGD

pects to rec

300 mi

o

2. The c om-

pany is currently

ramping up produc-

tion at its original Jackfish

project.

Jackfish, which started operations in

2007, is expected to reach full production of35,000 barrels of oil per day in the first half of 2009.

Jackfish is about four miles east of the Jackfish 2 s

northeastern Alberta.

Devon is the only U.S. independent with active oper

oil sands.

KearlThe federal government gave Imperial Oil Ltd. the go-ah

2008 to start work on its $8 billion Kearl oilsands project. T

jointly owned by Imperial Oil, with a 70 per cent stake, and Exxon

a 30 per cent share.

Horizon plant-looking west

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22 Oil & Gas Netwo rk, December 2008

But now Imperial Oil Ltd. is delaying a decisio

with its $8-billion Kearl oilsands proposal, which

the start date for the plant back by one year, the co

An environmental challenge and design revi

project (located north of Fort McMurray) have inc

said Imperial Oil.

Now, Imperial is suggesting the first quarter o f 2

a final decision on whether to go ahead, compa

noted.

If all things are go, plans are to use large sc

trucks, crushers and an oil sands hydrotransport base mine will be developed in stages. The initial m

have capacity of about 100,000 barrels per day.

Expected eventual production, based on a ph

opment scenario, could average about 300,000 ba

men a day.

A permanent workforce of around 1,100 to 1,3

pated, when all three mine trains are in operatio

will adopt a c amp-based operation with a w orkfo

tating schedule.

Long Lake ProjectA 50/50 joint venture of Nexen an d OPTI Cana

Lake Project is the first to c ombine SAGD, (steam a

ity drainage) with hydrocracking and gasification

Phase 1 of the Long Lake Project is located 4

east of Fort McMurray. Nexen ope rates th e SAGD p

project, while OPTI operates the upgrader.The Project has an estimated reserve life of 4

started producing premium sweet crude in the f

The oil is rated 39 degrees API with low sulfur

characteristics for making transportation fuels.

The Upgrader was targeted to begin producin

Sweet Crude in November and is expected to

58,500 barrels per day by early 2010.

Long Lake is using the patented OrCrude proc

to use 100 per of the bitumen.

It takes about 72,000 barrels per day of bitum

58,500 barrels per day of premium sweet crude oil

ly take until the fall of 2009 to get Long Lake's pr o

umes up to the anticipated 72,000 bpd for Phase

Regulatory approval is already in place for a s

of upgrading capacity. A Phase II upgrader wo

structed adjacent to Phase I of the Long Lake upg

Preliminary work on Phase II of the project is

although a corporate decision on w hen to move not happ en until sometime in 2009. There could

phases in total, each the same size of 72,000 barre

MacKay RiverLocated 60 kilometre s nor thwe st of Fort McMu

River is one of the largest commercial SAGD pro

Athabasca oil sands area.

Owned by Petro-Canada, the bitumen resource

River totals 2.4 billion barrels, giving a lifespan

years for the current plant and the planned Ma

expansion. At mid-year 2008, the plant was prod

30,000 barrels per day from four central well pad

48 well pairs.

In early 2005, Petro-Canada acquired the Dov

lease adjacent to MacKay River and then in 2006 p

ditional acreage from the province of Alberta. T

resources on the combined lands is more than s

support a second plant to be called MRX. Thexpansion would add up to 40,000 barrels per day

with first p roduct ion tent atively scheduled for late

investment decision on MRX is expected in the

of 2009.

Northern Lights ProjectThe Norther n Lights Project was put o n hold af

costs to develop the project swelled to $10.7 bil

back on now that Total E&P Canada has become i

Synenco Energy announced it was looking for

Total E&P Canada Ltd. took up that offer, buy

mately 94 per cen t of the common shares oPhotocourtesyofCanadianNaturalResourcesLtd.

The heavy pressure vessels are the heart of the Scotford Upgrader. Their construction

involved the largest heavy lift in Canada. Photo courtesy of Shell

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24 Oil & Gas Netw ork, December 2008

oilsands

Synenco held a 60 per cent share of Northern Lights alongside

SinoCanada Petroleum Corp., a owned subsidiary of China-

based Sinopec.

The prop osed Northern Lights mining and extraction proj-

ect will be located about 100 kilometres from Fort McMurray.

This asset will stren gthen Totals po rtfolio in th e Athabasca

region comprising principally the Joslyn project that will also

be developed by mining techniques and is situated approxi-

mately 50 kilometres from the Northern Lights Project,Total

said in a release.

Northern Lights consists of an oilsands mining and bitumenextraction project north east of Fort McMurray and a prop osed

heavy-oil upgrader in Sturgeon County near Edmonton.

The project is designed to produce 114,500 barrels per day

of bitumen initially and last an estimated 30 years. Regulatory

applications were filed in 2006 and 2007.

Petrobank - Whitesands and May RiverPetrobank Energy and Resources started forging ahead in

2008 with its most ambitious capital plan ever.

The 2008 capital program for the heavy oil business unit is

focused on expanding the Whitesands oilsands project near

Conklin, Alberta. Three new toe-to-heel injection (THAI) w ells

were drilled in the early part of the year. The wells will incor-

porate the trademarked CAPRI process, where a catalyst is

added around the outside of the well bore to enhance th e up-

grading of the oil insitu. Petrobank is also using a mod ified liner

completion designed to reduce sand production with a moreefficient surface facility design.

In January, Petrobank filed a pu blic disclosure docum ent for

its 100,000 May River Project, which kicks off the regulatory

process. The conceptual design for the project, to be located

near Whitesands in nor theast Alberta, has been comp leted. The

first phase of the p roject is expected to be a 15,000 bopd mod-

ule, expandable from a central location to the ultimate design

capacity of 100,000 bopd.

SuncorSuncor Energy just wrapped up a big expansion project

in the summer of 2008 that cost in the neighborhood of $3.6

billion dollars. It has increased p roduction t o 350,000 barrels

per day.

Now Suncor is already planning for the next expansion

to be p roducing 550,000 barrels per day at the en d of 2012.

That expansion has a price tag of $20.6 billion and work is

already well underway to bring produc tion up to 500,000 bar-rels per day.

Suncor said a major focus of the expansion plan will be to

reduce the en vironmental impacts of its oilsands operations.

The company named water m anagement as an area that would

benefit from the project, saying it would be completed w ith-

out an increase to its water licence. Suncor has said it has

already made strides in reducing water withdrawals from the

Athabasca River.

Included in the next expansion, called Voyageur, is an up-

grader that comes w ith estimated $11.6 billion price tag.

It will be the oilsands company's third upgrader in the re-

gion north of Fort McMurray the first being built in 1967

and the second coming on line in 2001/02 with the Millennium

expansion.

Plans call for the new upgrader to be constructed approx-

imately half a kilometre south-west of existing Suncor upgrad-

er facilities near the Steepbank, North Steepbank extension

and Millennium mines.Suncor CEO Rick George announced at the end of October

that Suncor expects to scale down spending and the pace of

construction on the planned Voyageur upgrader, delaying tar-

geted completion by about a year to the end of 2012. Stages 5

and 6 of Firebag in-situ operations are expected to proceed

but, as they are at relatively early phases of developmen t, spend-

ing and scheduling plans remain flexible to respond to market

conditions.

Of the total Voyageur capital bu dget of $20.6 billion, Suncor

had spent about $5.3 billion at the end of the third quarter of

2008.

SyncrudeThirty years ago Syncrude began pr oducing in t

Syncrude began producing high quality sweet

the summer of 1978, with the official grand open

15th of that year in its location north of Fort McM

Over the last three decades, Syncrude has sh

than 1.8 billion barrels of high-quality crude oil. I

more th an 128 patents through leading-edge rese

velopment that aims to reduce cost, increase reliab

prove environmental performance.

Syncrude also earned t he oil sands industr ys firmation certificate from the p rovincial governmen

In 2008, production from Syncrude has been ab

barrels per day. Through staged growth, Syncrude

crease production to about 500,000 barrels of crud

post 2015.

The Syncrude Project is a joint venture o

Syncrude Canada Ltd. and owned by Canadia

Limited, ConocoPhillips Oilsands Partnership II,

Resources, Mocal Energy Limited, Murphy Oil C

Nexen Oil Sands Partnership, and Petro-Canada O

Additional Upgraders

North West UpgradingNorth West Upgrading plans to build a merchabout 45 km north-east of Edmonton, in the

Heartland Area of Sturgeon County, converting b itu

low-sulphur diesel, diluent, low sulphur vacuum

butane. The planned location -- about five kilome

Scotford is close to major crude oil and dilue

established infrastructure, and a stable and skille

In addition, there are several opportunities for by-

ergies with other nearby industrial plants.

Completion and startup of the first 77,000-

phase will occur in 2010. Two further phases

which is presently targeted between 2012 and 2014

capacity to some 150,000 b/d.

Total E & P CanadaTotal E & P Canada anticipates starting constr

upgrader in the Fort Saskatchewan area in the la

2009.If all goes as plans, operation of Phase 1 woul

before 2015 at a capacity of 150,000 b arrels per d

scheduled to begin about three to four years late

CourtesyofCanadianNaturalReso

urcesLimited

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26 Oil & Gas Netw ork, December 2008

oilsands

capacity of 245,000 barrels per day of bitumen and with sub-

sequent op timization the c apacity may reach 295,000 barrels

per day.

It is expected that up to 4,000 workers would be needed

to construct the upgrader and the company estimates anoth-

er 300 to 400 employees would be needed to op erate the proj-

ect once it is up and running.

Total E&P Canada Ltd. is the operator on the Joslyn lease,

with an 84 per cent participating interest. Joslyn is located 65

km northwest of Fort McMurray in the Athabasca oil sands.

Pipelines

Alberta ClipperThe Alberta Clipper project is a new 1,607 kilometre (km)

oil pip eline from Hardisty, Alberta to Superior, Wisconsin.

The Canadian p ortion of the project involves construction

of about 1,078 km of new 914 millimetre outside diameter (36-

inch) oil pipeline between Enbridge's Hardisty Terminal and

the Canada - US border near Gretna, Manitoba. The pipeline

will have an initial capacity of 450,000 barrels per day and

allow for expansions up to 800,000 bpd. The estimated cost is

$2 billion and is expected to be open in mid-2010.

The National Energy Board has required Enbridge to con-

duct an e mergency respon se exercise at its South Saskatchewan

River crossing to allay concer ns abou t safety. Horizon mine shovel

Enbridge announced in August 2008 that

construction had started on the Canadian

portion of the Alberta Clipper expansion

project.

Initial mainline construction started near

Hardisty and Provost, Alberta and also near

Bethune, Saskatchewan.

Gateway PipelineThe Enbridge Gateway Pipeline Project is

being proposed to ensure theres enough

capacity to transport anticipated increased

production from Albertas oil sands.

The export pipeline would transport pe-

troleum from Strathcona County, northeast of

Edmonton, to a new marine terminal inKitimat on the north central coast of British

Columbia, where it would be exported to

market.

The Enbridge Northern Gateway Project

involves a new twin pipeline system. It is es-

timated to cost $4 billion and could create

more than 4,000 construc tion jobs.

The west line would transport petroleum

from near Edmonton t o Kitimat and wou ld be

1,170 kilometres long and 36 inches in

d iameter . I t would c arry an average of

525,000 barrels of petroleum each day.

The east line would transport condensate

from Kitimat to near Edmonton and would be

the same length, but 20 inches in diameter.

Enbridge had scheduled open houses in

British Columbia and Alberta for November

2008 as part of an extensive public reviewprocess led by Canadas National Energy

Board and the Canadian Environmental

Assessment Agency.

Keystone PipelineTransCanada Corp.s 3,456-km Keystone

pipeline will carry up to 590,000 barrels per

day of oil from Albertas oilsands to refiner-

ies in the Midwest. Construction of the

Keystone terminal and initiating station

began at Hardisty, Alberta on May 9, 2008.

There are fu ture p lans fo

pipeline to be added to the Key

that will carry a further 500,00

sands.

Keystone rec eived National E

approval last year for two maj

applications to construct and

Canadian portion of the p rojec

Southern Lights PipelineCalgary-based Enbridge Inc.

a $2.2-billion US project to imp

oils needed to transport heavy

men produced in Albertas oilsa

The Southern Lights Pipeline

180,000 barrels a day of dilueChicago area to Edmonton.

The proposed line involv

struction and changes to Enbrid

crude oil pipelines, the compan

It believes demand for impo

could reach 300,000 barrels per

in the next decade.

Southern Lights involves bu

kilometres of 16-inch pipe from

area to Clearbrook, Minn. It w

the flow of Enbridges line from

to Edmonton. The project would

building a new line to carry 18

per day of light sour crude oil f

Man., to Clearbrook.

If all the changes are made,

to ship light crude from Edm

U.S. Midwest will increase by 4per day.

Enbridge has received Nati

Board approval for i ts Sout

pipeline project. Its scheduled

tion in 2010.

The project was originally

cost less than $1 billion US, but

creased due in part to rising stee

It will run through parts

Wisconsin, Minnesota, No

Manitoba, Saskatchewan and Alb