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Shell’s oil sands expansion costs rise, partner says

Reuters India

Fri Feb 27, 2009 4:27am IST

(In U.S. dollars unless noted.)

CALGARY, Alberta, Feb 26 (Reuters) – The costs of a 100,000 barrel per day expansion of Royal Dutch Shell Plc’s (RDSa.L: QuoteProfile,Research) Athabasca Oil Sands Project have climbed to $13.7 billion, partner Chevron Corp (CVX.N: QuoteProfileResearch) said in a filing, well ahead of earlier estimates.

Chevron, which holds a 20 percent stake in the project, said the expansion will boost output at the oil sands mine and upgrading project to 255,000 barrels per day when the project is completed late next year.

In 2006, Shell estimated the expansion project would cost between C$10 billion and C$12.8 billion ($8 billion to $10.2 billion).

Janet Annesley, a spokeswoman for Shell’s Canadian oil sands unit, declined to confirm Chevron’s estimate.

“We have not provided a cost update for the expansion,” she said.

The expansion project is one of only a few in the Canadian oil sands that has not been affected by the financial crisis. Most new projects in the oil-rich region, where reserves are second only to Saudi Arabia, were re-jigged, delayed or canceled after oil prices plunged last year.

However in October, Shell said it would delay an decision on whether to go ahead with a second, 100,000 bpd, expansion of the project, because of low prices and high material and construction costs for oil sands projects.

Shell owns 60 percent of AOSP, with Chevron and Marathon Oil Corp (MRO.N: QuoteProfileResearch) each holding 20 percent. The project includes an oil sands mine near Fort McMurray, Alberta, and an upgrading refinery near Edmonton. ($1=$1.25 Canadian) (Reporting by Scott Haggett; Editing by Peter Galloway) and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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