|Shell Canada’s greenhouse gas emissions (self-reported) from oil sands operations. Shell has set a reduction target by 2010. Click to enlarge.|
Shell Canada has decided to proceed with the Athabasca Oil Sands Project (AOSP) Expansion 1. (Earlier post.) This is a 100,000-barrels-per-day (bpd) expansion of oil sands mining and upgrading facilities and is subject to final regulatory approvals.
The expansion will increase AOSP production to 255,000 bpd, up from the current 155,000 bpd at a cost of between C$10-C$12.8 billion (US$8.8-US$11.3 billion)—an increase ranging from 42% to 83% over the company’s estimate last year of C$7 billion.
The heated market has upped the stakes on oil sands investments. However, our analysis is that increasing world demand for energy will encourage the development of unconventional resources now and into the future. We take the long term view of commodity prices, and intend to invest wisely through the cycle to reach our mineable bitumen production goal of 550,000 barrels per day.
Shell Canada has some of the best land and mineable ore quality in the Athabasca area. With billions of barrels of bitumen in place, we see clear potential for sustained profitable growth.—Clive Mather, Shell Canada President and CEO
With this final investment decision, Shell’s proved and probable mineable bitumen reserves will increase by 631 million barrels. The AOSP Expansion 1 consists of:
- Construction of mining and extraction facilities at the Jackpine Mine, on the east side of Lease 13.
- Expansion of froth treatment facilities at the existing Muskeg River Mine.
- Expansion of the Scotford Upgrader.
- Common infrastructure to support long-term AOSP bitumen production of 550,000 bpd (330,000 bpd Shell share).
Federal and provincial cabinet approvals for Jackpine Mine were received in 2004 and the Scotford Upgrader Expansion received Alberta Energy and Utilities Board approval in September 2006. With the application and public hearings complete, a regulatory decision on the Muskeg River Mine Expansion, including the new froth treatment facilities, is anticipated by year-end.
The AOSP minority owners Chevron Canada Limited (20%) and Western Oil Sands L.P. (20%) have also approved their investment in AOSP Expansion 1.
Greenhouse gases. Shell Canada has set two targets for greenhouse gas emissions: one for its total business, one for the oil sands component.
In 2005, Shell Canada’s emissions from its base businesses were 7.6 million tonnes, 217 thousand tonnes less than in 2004 and 5.6% below its 1990 level. The company’s target for 2008 is 7.567 million tonnes.
Oil sands emissions in 2005 were, however, 3.68 million tonnes, 5% more than estimated emissions at start-up. Shell has set a 2010 target for oil sands emissions of 1.750 million tonnes. (See chart at top.)
While we are making steady progress to find ways to reduce emissions, our absolute emissions total will grow as we pursue growth projects like expansion of our oil sands operations. We are investigating ways to offset those increased emissions.