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Shell Planning Largest upgrader for oilsands
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Shell is planning construction on the largest oil sands upgrader to date. According to preliminary cost assessments made in a regulatory application, the new Scotford 2 upgrader, which would process up to 400,000 barrels a day of bitumen produced from Shell's oil sands projects in northern Alberta, could cost between $22-billion and $27-billion.
Because upgraders are extremely expensive to construct, especially in Alberta's over-heated economy, there has been no consensus on how companies should best deal with their future output. While Shell, Petro-Canada and Suncor have determined that constructing upgraders within Alberta is the best solution, other companies have not. The earliest construction would start is 2009.
Instead they have delayed a decision or pursued alternatives, such as convincing U.S. refiners to retool their facilities to take more heavy crude.
The size of Shell's potential investment adds to the sizable projects already being developed in Alberta by the company, which completed the $8.7-billion takeover of its Canadian subsidiary, Shell Canada earlier this year. The company is ultimately seeking to increase its output from the Athabasca Oil Sands Project (AOSP), which now produces 155,000 barrels a day, to 770,000 barrels a day, and also plans to develop other in situ production at its holdings at Peace River and Cold Lake.
Shell is currently expanding the AOSP by another 100,000 barrels a day at a cost of between $10-billion and $12.8-billion. While the project comprises both a mine and an upgrader, once that expansion stage is complete the partners have agreed to pursue separate solutions for processing output from future expansions of the plant, meaning Shell now needs to develop independent upgrading projects.
If approved, the new Scotford Upgrader 2 would be built in four separate 100,000 barrels a day stages, with the construction of the first starting in 2009 and finishing in 2012. At peak, each phase would require between 3,000 and 4,000 construction workers, and the final stage isn't expected to be complete until between 2022 and 2027, said Shell Canada spokeswoman Janet Annesley.
With production from the oil sands set to triple from current levels of around one million barrels a day by 2015, the question of what to do with that extra output has vexed oil companies in Alberta.
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econmod
Broker
/ Moderator
Jul 31, 2007, 1:10 AM
Post #1 of 1
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