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Globe and Mail: Shell Canada to spend $4-billion in 2007

ROMA LUCIW

Shell Canada Ltd. unveiled plans to hike its 2007 investments by 48 per cent to $4-billion, as it proceeds with the expansion of its vast oil sands project in Northern Alberta.

The Calgary-based integrated oil and gas company, facing a takeover by parent Royal Dutch Shell PLC, said Thursday it plans to spend nearly $4-billion next year, a rise of 48 per cent from $2.7-billion this year.

More than half of the $4-billion total — $2.45-billion — was allocated for the oil sands: $1.57-billion on expanding the Athabasca Oil Sands Project near Fort McMurray, Alberta; $220-million on Athabasca’s base business; $490-million on growing in-situ, where melted bitumen from underground is pumped to the surface; and $170-million on pre-development.

Shell Canada is the lead partner at Athabasca with a 60 per cent stake in the project, which could is proceeding with an expansion of the Athabasca oil sands, which could cost $12.8-billion and add 100,000 barrels of bitumen production by 2010.

Shell Canada chief executive officer Clive Mather said the North American and global economies ”are generating long-term energy demand which encourages the development of Canadian oil sands and unconventional gas.”

Outside of Shell Canada’s oil sands spending, just over $1-billion will go towards exploration and production in 2007, while $470-million will be spent on marketing, manufacturing, and distributing oil products.

The company said plans to ramp up its natural gas program and will spend around $50-million to determine the viability of a refinery near Sarnia, Ont. to process as much as 250,000 barrels of heavy oil a day.

The company said it “has been examining the potential to maximize value from its growing oil sands production in Alberta, through the expansion of its manufacturing infrastructure in eastern Canada to meet the increasing demand for light oil.” A decision could be made in the next two to three years.

Earlier on Thursday, Western Oil Sands Inc. announced a 2007 capital spending budget of $715-million, more than triple its 2006 budget, with the bulk of the funds going towards developing its stake in the Athabasca project.

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