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Canadian Press: Houston-based Shell Exploration buys Canadian heavy oil leases for $465M

11:44:19 EST Mar 21, 2006
CALGARY (CP) – Global oil giant Royal Dutch Shell (NYSE:RDS.A) plans to develop heavy oil properties it recently bought in Alberta for $465 million through a new company that will operate separately from Shell Canada Ltd., its major Canadian subsidiary.
Houston-based Shell Exploration & Production in the Americas, a Royal Dutch Shell unit, announced Tuesday it has created a new Canadian division, Sure Northern Energy Ltd., to evaluate and potentially develop heavy oil resources acquired from the Alberta government in a Feb. 8 oilsands land auction.
Sure Northern submitted a successful bid of $465 million Cdn for 10 parcels of land through a land agent.
“We are delighted to have secured this heavy oil acreage,” Marvin Odum, executive vice-president of Shell Exploration Americas, said in a release.
“Royal Dutch Shell has a suite of both enhanced and new heavy oil technologies that we could potentially apply to this type of resource. While not all of these technologies are commercially proven, we believe there is significant potential for us to pursue this opportunity and the first step is to further appraise this resource.”
The move by Shell builds on the global company's already major presence in the northern Alberta oilsands, where it controls the Athabasca Oil Sands Project near Fort McMurray through Calgary-based Shell Canada (TSX:SHC).
Shell Canada operates that development with a 60 per cent stake. Chevron Canada and Western Oil Sands Ltd. (TSX:WTO) each hold 20 per cent of the project, which includes the Muskeg River Mine in northern Alberta and the Scotford refinery upgrader on the outskirts of Edmonton and produces about 155,000 barrels of oil daily.
Odum said the latest energy move by Royal Dutch Shell “represents a distinct opportunity to assess new and emerging technology.”
“It complements our existing strong position in Canadian oilsands through Shell Canada,” he added.
“The establishment of Sure Northern does not change the relationship between Royal Dutch Shell and Shell Canada, and as the major shareholder in Shell Canada, Royal Dutch Shell maintains its full support for (Shell Canada's) ongoing business, and its strong commitment to SCL's future success and growth.”
Shell said appraisal wells on the new acquired properties are currently being planned for this year.
Steven Crane will be the president of Sure Northern, which will be a wholly owned subsidiary of Royal Dutch Shell plc.
Shell EP Americas is a part of the exploration and production business of the Shell Group of companies, managing oil and gas operations in North and South America.
© The Canadian Press, 2006

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