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Yahoo! News: Regulators approve Shell Canada upgrader expansion

CALGARY, Alberta (Reuters) – Alberta regulators have approved a 100,000 barrel-per-day expansion of Shell Canada Ltd.’s Scotford upgrading refinery, part of a planned oil sands project that could cost up to C$12.8 billion ($11.9 billion).

The Alberta Energy and Utilities Board gave Shell Canada the green light to proceed with construction at the upgrading refinery near Edmonton, Alberta. The upgrader converts tar-like bitumen from the oil sands into refinery-ready synthetic crude.

Construction isn’t expected to begin until next year but Randy Provencal, a spokesman for Shell Canada, said the firm may begin clearing land and preparing the site next month.

The upgrader work is part of an expansion of the Shell Canada-operated Athabasca Oil Sands Project, which includes an oil sands mine near Fort McMurray, Alberta.

The company said last month the cost of the project had ballooned to between C$10 billion and C$12.8 billion from C$7 billion because of higher labor and materials costs. The Athabasca project currently produces about 155,000 barrels of synthetic crude oil a day.

Shell Canada hasn’t made any public estimates on the cost of the upgrader improvements, but Provencal said it would account for about 60 percent of the price tag for the entire expansion.

Shell Canada is 78 percent owned by Royal Dutch Shell . It has a 60 percent stake in the Athabasca project while Chevron Corp. and Western Oil Sands Inc. each hold 20 percent stakes.

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