Nexen sees Long Lake oilsands project costs rising
Thu Aug 30, 2007 8:44PM EDT
reuters.com
TORONTO, Aug 30 (Reuters) - Nexen Inc (NXY.TO: Quote, Profile, Research) said on Thursday it expected higher capital costs at its Long Lake Canadian oilsands project and that synthetic crude production was now likely to start in the second quarter of next year.
Canada's fourth-largest independent oil producer had previously targeted late 2007 for the start of production at Long Lake, with a 12-month to 18-month ramp-up to full production levels around 60,000 barrels a day.
Nexen, which operates in North America, the North Sea, Yemen and Nigeria, said progress on parts of its upgrader had been slower than expected, partly because of labor shortages in the booming oilsands region.
"We now expect start up activities for the upgrader to commence in the first and second quarters of 2008, with first production of synthetic crude oil late in the second quarter," Nexen said in an evening statement.
Due to the delay, it said the capital cost of the project, in which Nexen has a 50 percent stake, was expected to grow 10 percent to 15 percent over a previous C$5.3 billion forecast.
But the company said returns from the project were also higher than it had expected when it first approved the plan.
"We expect to produce synthetic crude oil at Long Lake for several decades and benefit from a significant operating cost advantage," it said. ($1=$1.06 Canadian) |
