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Reuters: Shell taking its time studying Canadian investments

Tue Jul 17, 2007 5:40 PM BST
By Jeffrey Jones

CALGARY, Alberta, July 17 (Reuters) – Royal Dutch Shell Plc is taking a hard look at its Canadian unit’s multibillion-dollar project proposals while it integrates the business into worldwide operations, the executive in charge of the process said on Tuesday.

Before being fully acquired by Royal Dutch in April, Shell Canada had proposed a new heavy oil refinery in southern Ontario and has been a partner in plans for a C$16.2 billion ($15.6 billion) Arctic natural gas pipeline.

The parent, one of the world’s biggest oil companies, will take its time studying those, said Adrian Loader, Shell Canada’s president.

“We now have to step back and say, from a strategic perspective, what opportunities are there available? Should we move faster with some? Should we look at others in a different way? And that process will take longer, because these are strategic decisions,” he told reporters.

Loader pointed out Royal Dutch Shell owned 78 percent of Shell Canada before its C$8.7 billion buyout of the minority stake, so is no stranger to the investment plans.

No changes are afoot with the expansion of Shell Canada’s Athabasca Oil Sands Project, a development that could cost up to C$12.8 billion and add 100,000 barrels a day of output to the 155,000 barrel a day venture, he said.

“The current plans are to continue to invest in (Athabasca) Expansion 1. That’s on track; it’s going ahead,” Loader, 59, said. “We are looking at the other possibilities.”  

Shell has proposed a refinery near the city of Sarnia, Ontario, that could process 150,000 to 250,000 barrels of heavy crude, though a decision was not expected until 2010.

It is a partner with Imperial Oil Ltd. (IMO.TO: Quote, Profile , Research) in the Mackenzie Valley pipeline, which would move gas to southern markets from the Mackenzie Delta on the Beaufort Sea coast. The proposal has faced major cost increases and delays, leading some partners to question its viability.

Shell Canada’s integration into Royal Dutch Shell is proceeding smoothly and should be mostly completed by Sept. 4, said Loader, a Shell veteran who was in charge of the buyout.

He will remain in Canada until a new “country chair” is chosen, around the end of the year, he said.

Loader declined to say how staff numbers will be affected as the Canadian unit’s various business lines are slotted into the parent’s organization and employees get transferred or leave the company. Shell Canada had been run as a stand-alone corporation with a staff of about 5,000.

Under the new structure, the Athabasca project will be part of the Shell’s global oil products and chemicals unit, along with Shell Canada’s own refineries and gas station network.

The unit’s early-stage, steam-driven, or “in situ”, oil sands assets will be part of a new Calgary-based, North America-wide unconventional oil unit within the exploration and production division.

The city will also be home to an onshore conventional gas production unit and an onshore oil and gas exploration division, both encompassing Canada and the United States.

“We continue to be very committed to Canada and continue to invest in Canada,” Loader said.

($1=$1.04 Canadian)

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