Shell Canada revises expansion proposal near Peace River

An aerial view of the existing Peace River Complex. This is a thermal bitumen production facility with a license capacity of 12,500 barrels of bitumen per day

Susan Thompson
Smoky River Express

Shell Canada Ltd. has revised its proposal to expand in situ bitumen production at Carmon Creek, about 40 kilometres northeast of Peace River.

The Shell Peace River Complex is currently licensed to produce 12,500 barrels per day (2 000 cubic metres) of bitumen using thermal (steam) recovery methods. The proposed Carmon Creek project would have a production capacity of 80,000 barrels per day (12 600 cubic metres).

Shell expects the project will benefit local communities by providing new contracting and employment opportunities, but doesn’t have information yet on exactly how many jobs the project will create.

The Carmon Creek regulatory application was first submitted in December 2006. Shell Canada decided to withdraw the regulatory application in November 2008 after making a number of changes to the project. Based on the length of time which had passed since Shell first submitted, and the scope of the changes, the company decided to withdraw the original application and submit a new application.

Adrienne Lamb, Senior Communications Representative for Unconventional Oil - Exploration and Production, Shell Canada, explains that there are two major differences between the 2006 application and the current application.

“We’ve reduced the production capacity from 100,000 barrels per day to 80,000 barrels per day. We’ve also changed the subsurface well design. In the original application we were using horizontal cyclic steam stimulation wells. We now believe we can get better recovery efficiency using vertical steam drive wells.”

However, the main elements of the Carmon Creek project remain the same. It will still include the construction of new central processing facilities, cogeneration of electricity and steam, multiple well pads, and a steam distribution and bitumen gathering system. Additional infrastructure to be built may include roads, natural gas and condensate supply pipelines, a diluted bitumen sales pipeline, and electrical power lines.

“In the simplest terms the project injects steam into the oil sands reservoir to make the bitumen fluid enough to be pumped to the surface. It is then transported via aboveground pipelines to a processing facility which then separates the bitumen, gas and water. The water is then treated and recycled, the small amount of gas in the bitumen is removed and treated. This produced gas, along with purchased natural gas, is then burned as fuel in the cogeneration units. Diluent is added to the bitumen to make it fluid enough to be transported in pipelines to be sold into markets,” Lamb explains.

The new application will reuse a lot of the environmental, socio-economic and engineering and design work that was done for the first application, but will still require additional design and engineering work. A new Environmental Impact Assessment (EIA) must also be completed, and will look at the possible cumulative environmental effects of the project, including the effect on wildlife and vegetation, climate, air quality and noise, groundwater, and surface water, among other things.

Completing the current application requires some help from the public. The proposed Terms of Reference for the Environmental Impact Assessment (EIA) have been issued to re-initiate consultation with the community, and the documents are available for those who would like to read them. People are encouraged to email Shell with questions. The company is also holding face-to-face meetings with key stakeholders and a community open house is being planned for June.

Shell is working towards submitting a regulatory application for the Carmon Creek project by the end of 2009. Once the regulatory application has been submitted, Shell estimates the regulatory review period would take upwards of 18 months, making 2011 the earliest that the company will be in a position to make an investment decision on the project.

Those timelines mean that the project will not likely be affected by this year’s low oil prices.

“Although oil price is one consideration, it is important to note that we don’t base our investment decision on oil prices at a point in time (or on peaks or lows) but on conservative estimates of what we believe the long-term prices will be looking at range of prices. We take a long-term perspective when taking decisions whether to proceed with projects and a number of our decisions are taken in a lower-price oil environment when we may also be able to take advantage of lower costs.”

But Lamb cautions that despite the new application, the final decision on the project is still a long way off.

“There are a number of hurdles and milestones before we’re in the position to make a decision to proceed with the project. That decision will take a number of factors into consideration, including but not limited to, project costs, oil prices, and market conditions.”

For more information on the Carmon Creek project, call toll-free 1-877-347-4355 or send an email to carmoncreek@shell.com .

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