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Bloomberg: Shell to Build New Oil Plant for Up to C$27 Billion (Update1)

By Sonja Franklin

July 30 (Bloomberg) — Royal Dutch Shell Plc’s Canadian unit is seeking to build a new plant for as much as C$27 billion ($25 billion) to process bitumen from Alberta’s oil sands and supply North American refineries.

The Scotford Upgrader 2 Project, to be located next to existing facilities near Fort Saskatchewan, Alberta, will be built in four phases with a capacity of 100,000 barrels a day each, Calgary-based Shell Canada Ltd. said in an application to provincial regulators on its Web site today. Construction may start as early as 2009.

The projected cost for the project, which will be owned by Shell, ranges from C$22 billion to C$27 billion and includes future bitumen blending facilities, the company said. The plant could begin operations as early as 2012.

“The need for this project is driven by Shell’s desire to have the flexibility and option to upgrade bitumen from oil sands developments into higher value crude oil products,” the company said in the application. “The crude oil products can be used as feedstock by petroleum refineries throughout North America and in other countries.”

With the Scotford Upgrader 2 Project, Shell will be able to process more bitumen from its Athabasca, Cold Lake and Peace River oil-sands developments in western Canada as well as from other suppliers. Shell owns the existing Scotford Upgrader in Fort Saskatchewan with partners Chevron Corp. and Western Oil Sands Inc.

Shell paid C$8.7 billion in April to buy the 22 percent of Shell Canada it didn’t already own. The company plans to spend as much as C$12.8 billion to expand the capacity of its Athabasca Oil Sands Project by 100,000 barrels a day.

To contact the reporter on this story: Sonja Franklin in Calgary at [email protected]

Last Updated: July 30, 2007 17:08 EDT

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