February 16, 2004

Shell Canada receives conditional approval for Jackpine development

A second major oil sands development in as many weeks has received conditional approval from a joint review panel established by the Alberta Energy and Utilities Board (EUB) and the Canadian Environmental Assessment Agency (the Agency). Phase 1 of Shell Canada's Jackpine mine, a second oil sands project for Shell in the Athabasca oil sands region of northern Alberta, was found to be in the public interest and unlikely to result in significant adverse environmental effects.

The approval is subject to 19 conditions; further approvals are still required by the cabinets of both the provincial and federal governments. Once these approvals are received, Shell will move ahead with the project development phase, which includes feasibility studies and continued community dialogue.

The $2-billion Jackpine development is a joint venture proposal led by Shell, with a 60% interest. The other partners are Western Oil Sands and Chevron Canada, each holding 20%. The project, located 70 kilometres (km) north of Fort McMurray and 10 km east of Fort McKay, includes an oil sands mine, a bitumen extraction plant, cogeneration plant, and water pipeline. As proposed, the project would be in full production by 2010, lasting 22 years and yielding 31 800 cubic metres per day (200 000 barrels per day) of bitumen product.

"This is a big step forward towards our long-term growth goal of producing 500,000 barrels per day from our Athabasca oil sands leases," said Neil Camarta, Shell's senior vice-president, oil sands. "We appreciate the support shown by our stakeholders in helping us to create a sustainable project," he added.

"The conditional approval of the Jackpine mine is a very significant step towards Western's continued growth in future production and reserves," said Western Oil Sands CEO Guy Turcotte.

Phase 1 of the Jackpine mine is one of three planned development stages for Shell's Athabsaca oil sands leases. The other stages include: expansion of the existing Muskeg River Mine to increase total production from the current design level of 155,000 barrels per day of bitumen up to approximately 225,000 barrels per day (completion projected before 2010); and Phase 2 of the Jackpine mine, an extension of the first phase allowing for additional production of approximately 100,000 barrels per day. The exact timing of any of these developments will depend on a number of factors, including the outcome of the regulatory processes, project economics and ability to meet Shell's sustainable development principles.

A public hearing on the proposed project was held last October in Fort McMurray. Most of the issues raised for the panel's consideration focused on the project's anticipated environmental and socio-economic impacts.

As with the approval of Canadian Natural Resources Limited's Horizon project (ELW February 9, 2004), the joint panel's report on the Jackpine project includes both the EUB's decision under provincial legislation and conclusions and recommendations pursuant to the Canadian Environmental Assessment Act (CEAA) with respect to the environmental assessment of the project.

In the context of its EUB mandate, the joint panel has approved the cogeneration plant and water pipeline and has approved the oil sands mine, subject to 19 attached conditions. These conditions-adding to or expanding on existing regulations and guidelines-relate to mining operations, resource conservation, and tailings management. Most are similar to the 17 conditions attached to the Horizon approval. In addition, Shell has made a number of commitments not specifically required by the EUB's regulations and will be expected to fulfill those commitments.

In the context of its CEAA mandate, the joint panel has concluded that the project is unlikely to result in significant adverse environmental effects provided that the mitigation measures proposed by Shell and the recommendations of the joint panel are implemented. The joint panel has also made recommendations intended to help the federal and provincial governments mitigate the environmental effects of the project.

The joint panel report (EUB Decision 2004-009) may be viewed on the EUB Web site, www.eub.gov.ab.ca, and on the Canadian Environmental Assessment Agency's Web site, www.ceaa-acee.gc.ca. More information is available on Shell Canada's Web site, www.shell.ca; Western Oil Sands' Web site, www.westernoilsands.com or president and CEO Guy Turcotte, 403/233-1700; Brenda Poole Bellows at the EUB, 403/297-7012, E-mail brenda.poolebellows@gov.ab.ca; or Gordon Harris at the Agency, 819/953-5045, E-mail gordon.harris@ceaa-acee.gc.ca.

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