Shell Pumping $27B To Oilsands

CALGARY – In its first major move since privatizing Shell Canada Ltd., Royal Dutch Shell PLC said yesterday it will spend up to $27-billion to build the biggest oilsands upgrader yet.

The Anglo-Dutch oil major said in a regulatory filing that it wants to build Scotford 2 in the Fort Saskatchewan area near Edmonton, beside its existing Scotford 1, where a multi-billion-dollar expansion is now underway. It will join a dozen other upgraders proposed or under construction in the region. Shell’s mammoth structure will process up to 400,000 barrels a day of bitumen from its Athasca project as well as from in-situ projects in other parts of the province.

The price tag, one of the biggest spending plans in the country, reflects the scale of the oilsands business in Alberta and its rising costs. It comes on the heels of Petro-Canada’s announcement last month that it will spend with its partners as much $33.4-billion on its Fort Hills project, which involves a mine in Northern Alberta and upgrading facilities near Edmonton.

Shell’s plan “shows their commitment to developing the oilsands – to Canada and to stable reserves,” said Jeff Martin, oil and gas analyst at Peters & Co.

Financial Post