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Shell: oil sands project adds 100,000 barrels/day

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Royal Dutch Shell PLC said Wednesday a major oil sands project in Canada is now producing 100,000 barrels per day, nearly doubling the company’s production from the unconventional source.

The Jackpine Mine project has been five years in the building and cost an estimated $2 billion. With it on line, total production by the Shell-operated Athabasca Oil Sands Project has increased to a quarter of a million barrels per day. Shell’s total production was 3.11 million barrels of oil and equvalents per day in the second quarter.

Oil sands contain an extremely dense form of oil known as bitumen that companies have only recently been able to exploit profitably. Bitumen from both the Jackpine Mine and Shell’s existing Muskeg River Mine are processed at the same plant near Edmonton, Canada, which is now approaching capacity, Shell said.

Shell has invested heavily in new production capacity throughout the downturn after an accounting scandal in 2004 forced it to slash proven reserves. The company’s production has been declining for nearly a decade but Shell expects it to rise more than 10 percent by 2012 from 2009 levels.

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