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Construction moving forward at oilsands facility

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November 13, 2013

Royal Dutch Shell is moving forward with the construction of the Carmon Creek oilsands project in northeast Alberta, which will significantly increase production at its Peace River complex.

“I’m pleased we’re moving ahead with this important project,” said Lorraine Mitchelmore, executive vice president heavy oil.

“Shell’s Peace River oil leases represent a significant development opportunity. Our decision to invest in Carmon Creek has been carefully studied with the goal of designing a project that is competitive from a commercial, technological and environmental perspective.”

Shell is planning to construct, operate, and reclaim an in situ oilsands project about 40 kilometres northeast of the Town of Peace River.

The proposed project involves the construction of a central processing facility (CPF), followed about three years later by a second CPF.

Each CPF will have a capacity of 40,000 barrels a day, with associated facilities, thermal injection wells, production wells, disposal wells, utilities, and infrastructure.

For the startup of Phase One and Two, Carmon Creek will produce from 13 well pads.

An inter-field pipeline system will transport steam to the wells and produce bitumen, water and natural gas that will be sent to central processing facilities.

The central processing facilities will separate bitumen from water and natural gas, which can then be used to produce steam.

Diluted bitumen is expected to be exported to existing North American refineries.

The project will include three cogeneration units and field facilities to meet the maximum production capacity of 80,000 barrels per day for the two CPFs in about five years.

After that, as production from the initial field facilities decline, new wells will be drilled to maintain the 80,000 bbl/d capacity of the CPFs.

About 95 well pads and two central processing facilities would be required over the project’s expected 35-year operation.

Shell is taking a well manufacturing approach to drill and complete the wells using the Sirius Well Manufacturing Services joint venture.

This approach is based on standardization of components, and allows quicker and repeatable operations that provide an opportunity to reduce costs.

The project will use a vertical steam drive thermal recovery process, along with initial cyclic steam stimulation. This recovery method moves steam horizontally between vertical wells.

Cogeneration units will produce an annual average of up to 630 megawatts (MW) of electricity, of which about 500 MW is expected to be sold to the northwest Alberta power grid.

Shell submitted its regulatory application for Carmon Creek in 2010 and received approval from the Alberta Energy Regulator in April 2013.

Preliminary ground clearing activities have already started and construction is scheduled to begin next summer.

The project is expected to employ more than 1,000 local trades and contractors during peak construction periods.

The Peace River Complex is currently licensed to produce 12,500 barrels of bitumen per day annual average and employs about 100 people. Once fully operational the project will create an average of about 400 person years of employment.

This includes 30 person years of employment for contractors supporting plant operations and 100 person-years of employment for contractors building replacement pads and field infrastructure.

The project is expected to provide about $8.9 billion in tax and royalty revenue to the provincial government, as well as about $2.5 billion in tax revenue to the federal government.

Shell began producing bitumen from its Peace River oil sands leases in 1979 with the Peace River In Situ Pilot project. The Peace River Complex began operations in 1986.


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