Athabasca Oil Sands Project

Canada’s oil sands are one of the largest oil deposits on earth. With some 173 billion barrels of crude oil and spanning roughly 140,000 square kilometres, oil sands are located in the Athabasca, Cold Lake and Peace River regions of northern Alberta. Explorers first reported the outcrops of these sands more than 200 years ago.

At the Muskeg River Mine the world’s largest trucks use giant shovels to excavate the ore containing the bitumen

We convert bitumen into synthetic crude oil products for refineries. The production process begins at the Muskeg River Mine where the world’s largest trucks use giant shovels to excavate the ore containing the bitumen. Using warm water we separate the bitumen from sand and clay. The resulting heavy, viscous bitumen is diluted with a solvent, and transported by pipeline to the Scotford Upgrader where we convert it into synthetic crude oils.

At different refineries, including our Scotford Refinery, the crude is further processed into fuel products. The AOSP has a design capacity of 155,000 barrels of oil equivalent per day. A 100,000-barrel-a-day expansion of both mining and upgrading facilities is currently under construction. More expansions are planned to achieve the long-term goal of producing more than 500,000 barrels a day.

The current production capacity of AOSP is 155,000 b/d of synthetic crude. Shell has regulatory approvals in place for Muskeg River Mine, Muskeg River Mine Expansion and Jackpine Mine, enabling  production up to a total of 470,000 b/d of minable bitumen. In addition, Shell has existing licences for 290,000 b/d of synthetic crude production at the Scotford Upgrader.

In 2007 Shell applied for licences to increase production of bitumen – a very heavy oil - from our oil sands leases to  770,000 b/d, and for licences to increase bitumen upgrading to 690,000 b/d.

These applications cover:

• Jackpine Mine Expansion: a proposed expansion of Jackpine Mine with 100,000 b/d, including development activities on leases 88, 89, 15, 631, 632.
• Pierre River Mine: a proposed 200,000 b/d development on the west side of the Athabasca River, initially on leases 9 and 17 and progressing to leases 309, 310, 351, 352. A resource assessment of additional Shell leases north of Pierre River Mine is continuing
• Scotford Upgrader 2: a proposed 100% Shell-equity 400,000 b/d bitumen upgrading facility located adjacent to the existing AOSP Scotford Upgrader.

The Calgary Research Centre (CRC) undertakes research and technology, providing laboratory and technical services to Shell in Canada.

The CRC employs more than 200 scientists, technologists and engineers focused on ensuring a smaller environmental footprint for our operations, including reduced water usage and reduced greenhouse gas emissions from Canada’s oil sands developments.

We are developing the oil sands responsibly by incorporating phased land reclamation plans that incorporate indigenous environmental knowledge. With an increase in production from oil sands, emissions of carbon dioxide (C0₂) will go up too - underscoring our ambition to develop a leading ability in managing C0₂ in a number of ways, including greater efficiency and technological innovation. For example, the first stage of expansion will employ a new technology that cleans the bitumen froth more efficiently, saving energy and water and avoiding C0₂ emissions by 40,000 tonnes a year.

In 2008, more than C$210 million of Shell’s total local spending went towards purchasing supplies and services from aboriginal groups such as the Athabasca Chipewyan First Nation.

Fuels produced from oil sands bitumen emit 15% more carbon dioxide (CO2) than conventional crude oil on a wells-to-wheels basis. We are working to reduce this gap by improving our energy efficiency and exploring the potential for large-scale capture and storage of CO2.

Shell Enhance is a new high temperature froth treatment process that can reduce energy usage by about 10%, avoiding 40,000 tonnes of greenhouse gas emissions a year. Developed by scientists at Shell and Natural Resources Canada, Shell Enhance will be built into the first expansion phase of the Athabasca Oil Sands Project (AOSP Expansion 1) now under construction.

Shell is also developing new technologies and processes to improve the management of fresh water at both our Muskeg River Mine and Scotford Upgrader. This will allow Shell to increase water treatment, recycling and storage at both facilities.

A significant portion of the output of the Scotford Upgrader is sold to the Scotford Refinery. The balance of the synthetic crude is sold to the general marketplace (predominantly PADD II in the USA).