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THE WALL STREET JOURNAL: Shell Buys Rights To Oil-Sands Field For $400 Million

By CHIP CUMMINS
March 22, 2006; Page A14
Royal Dutch Shell PLC said it paid 465 million Canadian dollars (US$400 million) for the rights to explore 219,000 acres in Alberta, Canada, betting big on the company's ability to find and produce heavy, difficult-to-extract oil there.
The move is the latest by Shell to shore up its store of future oil and natural-gas projects around the world. It also underscores the oil industry's enthusiasm for Canada's vast oil sands, tar-like deposits of petroleum that are much more difficult and costly to extract from the ground than conventional reserves in places like West Texas or the Middle East.
The big initial outlay, paid out in an Alberta government auction, must be followed by billions of dollars in capital investment if initial exploration and development planning succeed. But amid today's superhigh oil prices and fewer prospects elsewhere for big oil companies, Canada's oil sands have attracted significant new investments.
Shell is already a big oil-sands player. The lease turns Shell into “one of the biggest, if not the biggest, land owner in the oil sands,” says Tom Ebbern, executive managing director of Tristone Capital, a Calgary-based investment adviser, who says he doesn't own Shell shares. Moreover, the scale of Shell's new acreage acquisition is eye-popping compared with recent deals. Chevron Corp. said earlier this month it would spent C$70 million for 75,000 acres in the area. Shell has the right to acquire a 20% interest in that project.
Shell, The Hague, Netherlands, said it established a new subsidiary to proceed with the exploration and development work.
—- Russell Gold contributed to this article.
Write to Chip Cummins at [email protected]

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