Japan Canada Oil Sands Ltd. (JACOS), a consolidated subsidiary of Japex, currently produces 6,000 to 7,000 barrels per day of bitumen (ultra heavy crude oil extracted from oil sands) at its Hangingstone Demonstration Project area. The Hangingstone Project is a joint venture project to develop an area adjacent to the current Demonstration Project by JACOS and Nexen Inc. (Nexen) in which JACOS holds a 75% participating interest as the operator, while Nexen holds the remaining 25% interest.

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After completing the front end engineering design and obtaining Scheme Approval from the Alberta provincial government in November, 2012, the partners will now commence full-scale development work aiming at production start-up in the first half of 2016.

Considering investment timing and technical risks, the partners have decided to adopt a staged development approach. More specifically, the initial stage will result in bitumen production capacity of around 20,000 barrels per day. A decision on expansion of the facilities to bitumen production capacity of approximately 30,000 barrels per day will be made after start-up of the operation.

Bitumen production will continue for around 30 years using the steam-assisted gravity drainage (SAGD) method, which has already been utilized at the Hangingstone Demonstration operation for more than 10 years.

JACOS’ produced bitumen will be diluted by ultra-light crude oil such as condensate (the diluent) and sold as diluted bitumen (dilbit) equivalent to heavy crude oil through pipelines mainly to refineries in the US.