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Upgrader alley keeps growing
1 L7 l8 v2 z! iAnnouncement increases proposed Edmonton-area plants to 12* n+ p# b" E' r5 Z; `' J0 K. N! Z+ ?* z
0 R) P* O% P6 l. ~. a9 k9 wGordon Jaremko, with files from Jeffrey Hawkins1 ?8 U* s& Q4 B; m" t
The Edmonton Journal6 V) B& c7 n' U0 p1 X
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Thursday, January 25, 2007+ P+ q! O# H1 y
9 W4 Z& a9 z; e* f6 e- UEDMONTON - The Athabasca Oil Sands Project unveiled on Wednesday a six-year construction program to erect four more
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Edmonton-area bitumen upgraders, expand a Fort McMurray mine and open up a new pit.
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The announcement from Alberta's youngest oilsands mega-producer came on the same day as 2,500 workers began work on $12.8 billion in plant additions announced last year.6 I1 ]0 f p, F9 y$ f+ C8 r
% r7 W! z& o# B0 f0 @5 pAlso under study is a new Ontario upgrader and refinery in Sarnia.4 I. Q7 l; V& R, ?4 V5 ~" K
8 i, B2 m- ?$ L# G+ y* h2 T0 hThe new upgraders are planned for next door to the three-year-old project's first Scotford upgrader five kilometres east of Fort Saskatchewan. A second upgrader at the site is now entering construction next door and an expansion is underway at Athabasca's mines 70 kilometres north of Fort McMurray.' Z3 {! g$ D* \# y/ i
% [$ R: m8 Z5 v, mThe plan increases to 12 the number of projects in Edmonton's $30-billion-plus bitumen upgrader lineup undertaken by all related companies operating in the region.
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( K7 c7 b& U4 E) g' Q n' QAthabasca aims to build four new plants producing 100,000 barrels per day each in order to process all of its low-grade bitumen output into premium refinery-ready oil.$ {; \1 r$ |% w; i4 ?; @
1 y) q2 V9 q' d. C4 h' N: O NEach mine and upgrader piece of the plan requires 3,000 to 4,000 workers to build. Simultaneous Edmonton and Fort McMurray construction is expected to employ a total of up to 8,000 skilled trades personnel during activity peaks.
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. N6 Q$ O* d. n4 U( w! g' ICost estimates are under review and not disclosed. But the project's 60-per-cent lead owner, Shell Canada, raised its production target to 770,000 barrels a day from its former 500,000 barrels daily.9 W3 U" K/ Z$ n7 c
+ d, h, v" j: {% j"You can go faster and go cheaper," Shell Canada president Clive Mather said in an interview.0 G+ b. V+ d( |5 f) Y% P6 S3 k" P
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The new plan calls for uninterrupted construction until the mammoth oilsands operation grows to its full potential, he said.
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The program will weld project managers, engineers and workers into a team that will only have to be recruited once and will become more efficient as the development gains momentum, Mather predicted.
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: }/ }& X. a) R1 w0 ]! L- cAthabasca minority partners Western Oil Sands and Chevron Canada, which each own 20 per cent, are committed to support expansion planning and will make decisions on participating in construction as starting times for the stages roll around.4 T8 [/ J2 @6 h
0 |9 M# |! Z3 {Royal Dutch Shell PLC, while seeking to buy out the 22-per-cent minority of Shell Canada's shareholders for $8.7 billion, supports the oilsands growth program with its established 78-per-cent majority ownership, Mather said.4 h n: P! F4 T. [# `
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"It is a remarkable resource in a part of the world which is geopolitically safe," he said. "We believe the fundamentals (of oil supply and demand) are very strong in the long term and the world needs the energy."
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; [, R- g0 }/ u2 J/ t9 Q FMather vowed that Shell will not be "distracted" by market gyrations that cut oil to $50 US a barrel this month, the lowest price since mid-2005 and 36 per cent below its $78.40 peak last summer.
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"Prices will fluctuate. Costs will fluctuate as well," Mather predicted. "We want to invest not just for this year but for many years to come."
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0 W+ v$ v6 v' C: B5 NAthabasca's schedule for its new growth stages calls for completion of preliminary public consultations, environmental studies and formal regulatory applications this year.
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/ k1 c# o/ ~. e1 JConstruction is expected to begin as the project's current expansion work is completed in 2009, then continue into 2012.* y6 Z! W# C$ @6 u3 y8 A
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The plans do not include nuclear power. But Athabasca will consider becoming a customer if Ottawa's Atomic Energy of Canada advances its current proposals for an oilsands reactor beyond talking stages into a credible project, Mather said.
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/ x* C p( h. b" _A nuclear plant could significantly reduce carbon-dioxide emissions by replacing natural gas and bitumen burned in oilsands production, he said.2 W" A: y1 x$ [ D
( M7 s8 _1 R5 ?: H9 bAthabasca is braced for Canada to adopt new policies on controlling greenhouse gasses to tame global climate change while the project develops, he said.# }4 b- F" i3 c; G
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"We can expect further political leadership on this issue. We welcome that," Mather said.
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2 |1 E/ g) o. p9 b& O"We need to have common frameworks," he added in urging governments to generate a clear greenhouse-gas emissions policy to guide industry and consumers.0 ~. X2 w" Y6 G7 c1 a" K( R: L' Y
3 r) @9 n4 H' a* K0 k"It's going to have to apply to many sectors," Mather said. Canada should encourage development of technology to capture and permanently store waste carbon-dioxide, and to increase use of biological fuels such as ethanol, he added.4 V; N; U9 K4 C; Y2 ~ d) i
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The 54-per-cent jump in Athabasca's planned oilsands production followed new exploration drilling on its bitumen leases north of Fort McMurray.
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Estimates of oil in the properties rose by about two-thirds to 10 billion barrels, and there are still untested areas.
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" }# E# D/ }6 |& c0 b- uFurther exploration could sow seeds for still more expansion projects, said Athabasca communications manager Janet Annesley and Western Oil Sands president Jim Houck.! ~. m. A2 K2 j$ B, y" y+ G
9 R9 K4 U, J: qLocal farmers and residents say they are not surprised to hear about the expansion and plan to voice their opinions when given the chance.
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"It's absolutely crazy here right now," says Kathy Radke, a local dairy farmer. "I'm not happy about this at all. The pollution here is just awful, but they keep overpowering everyone in their way. We feel completely helpless."& D4 }& A2 l" \* X: n
2 o" C! ]4 K$ |. E$ FMaureen Chichak has lived on an acreage near the Scotford site for the past 28 years and says with each expansion her community suffers the cost in terms of their health. "We're already too crowded here," she says. "Accidents keep happening and emergency response isn't what it should be. We're just a disaster waiting to happen."3 w+ w2 b- `# V( ~9 F
/ E% f( ?' }$ T3 e7 R) r& H5 KHowever, the mayor of Fort Saskatchewan says the announcement should be welcomed by his municipality, if the concerns of his citizens are met during the planning process. "It not exactly shocking news and I don't think we should see this as a bad thing," he said.
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5 v* Z) U% a- a$ s0 @2 G! f" X) ugjaremko@thejournal.canwest.com. ~$ f( n3 |: M! R- u6 F( ?$ y
© The Edmonton Journal 2007 |
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