C$3.5 BILLION ATHABASCA OIL SANDS PROJECT A "GO"

In December Shell Canada Ltd., together with Chevron Canada Resources Ltd. and Western Oil Sands Inc., announced approval of the C$3.5 billion Athabasca Oil Sands Project. Construction will begin immediately with production planned for late 2002. Under a joint-venture agreement, Shell Canada retains a 60 percent interest in the project while Chevron and Western each hold 20 percent interest.

The Athabasca Oil Sands Project joint venture includes:

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In addition to its joint-venture investment of C$2.1 billion, Shell Canada will invest approximately C$400 million to modify its existing Scotford Refinery to utilize the new synthetic crude oils produced by the Scotford Upgrader.

As well, a number of companies will construct new facilities to serve the needs of the Athabasca Oil Sands Project under long-term commercial agreements. They include:

Construction on the Muskeg River Mine and Scotford Upgrader will begin immediately. First oil production is scheduled for late 2002.

The Resource

The resource of the Muskeg River Mine and Lease 13 contains more than 5 billion barrels of mineable bitumen. This is about equal to twice the amount of conventional oil reserves remaining in Alberta. The oil sands deposit is close to the surface and contains a high concentration of oil, making it ideally suited to mining. The Muskeg River Mine will recover 1.65 billion barrels of bitumen over 30 years. The project will provide refiners with the product necessary to produce approximately 1 percent of North American demand for transport fuels.

Canada’s oil sands industry currently produces more than 18 percent of the nation’s petroleum needs.

Western Oil Sands

The project was delayed when Broken Hill Proprietary Ltd. (BHP), an Australian natural resources producer, dropped out in early 1999. Executives from BHP left the company, formed Western Oil Sands, and attracted C$900 million in capital. Western Oil Sands plans a public offering next year.

Environmental Aspects

According to Shell Canada, the environmental controls at the Scotford Upgrader will offer performance advantages:



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