Oil Sands Project, Canada
CANADA
Shell started operations in Canada in 1911 and is now one of the largest integrated petroleum companies in the country.
In 2008, the Shell unconventional gas operations in Alberta and British Columbia proceeded with land acquisition, drilling and new infrastructure. Shell acquired Duvernay Oil Corp., which, together with other lease acquisitions in the Montney region, added some 2,400 km2 to our tight gas landholdings. The estimated Shell share of resources from these holdings is some1 billion boe.
We are also designing a coal-bed methane well test programme in a concession of some 3,200 km2 in British Columbia.
Shell holds a 31.3% interest in the Sable Offshore Energy Project offshore eastern Canada and is a partner in a deep-water Orphan Basin exploration venture (Shell interest 20%). We have a 100% interest in the Niglintgak gas field and are a joint venture partner of the proposed Mackenzie Gas Project that includes a 1,200 km pipeline to transport onshore natural gas reserves in the Mackenzie Delta to North American markets.
Shell is the largest offshore leaseholder off the west coast, although the acreage remains under government moratorium.
Canada’s oil sands contain more than 170 billion barrels of recoverable oil resources, a volume second only in size to Saudi Arabia. Only 2% of these resources have been developed to date. Shell has operations in each of Alberta’s three main oil sands deposits.
The Athabasca Oil Sands Project (AOSP) mines bitumen – a thick, heavy oil – in northern Alberta. The current bitumen production capacity is 155,000 b/d (Shell interest 60%). The bitumen is piped to our Scotford Upgrader near Edmonton, where it is turned into synthetic crude. Today the AOSP supplies about 10% of Canada’s oil demand. An expansion of AOSP now in progress will add about 100,000 barrels of daily production capacity (Shell interest 60%).
Shell is exploring the feasibility of CO2 capture and storage at the Scotford Upgrader, where captured CO2 could then be transported by pipeline for underground storage.
Shell’s in situ operations near Peace River and Cold Lake use wells to extract bitumen that is too deep for surface mining. Both cold production and steam-assisted thermal recovery are used to produce this heavy oil.
Additional heavy oil resources and advanced recovery technologies are under evaluation on about 1,200 km2 in the Grosmont oil sands area.
USA
Shell has been active in the USA since 1912 and is now a major oil and gas producer in the Gulf of Mexico (GoM) and of onshore tight gas. We are also involved in exploration.
In 2008, Shell acquired significant exploration interests in the Chukchi Sea, offshore Alaska and also won leases in GoM, onshore New Mexico and Louisiana.
Shell is using technology and efficient multi-rig drilling methods to develop tight gas resources in low-permeability reservoirs in South Texas and at Pinedale, Wyoming. Drilling and completing several wells simultaneously reduces costs. In late 2008, year round drilling operations in Pinedale were approved following a new environmental plan developed by Shell. Improvements to technology and techniques in the past 15 years have helped us reduce our well delivery cost by 40%.
During 2008 Shell also increased its acreage position in the Haynesville shale gas play of north-west Louisiana. Four drilling rigs were in operation at the end of 2008 with 10 wells producing gas with encouraging initial flow rates.
In California, Shell has equity in the Aera operation (Shell interest 51.8%) that operates some 15,000 wells producing about 170,000 boe/d of heavy oil and gas, and accounting for around 30% of the state’s production.
Shell continued research into the development of oil shale resources in the Piceance Basin of north-west Colorado, and holds three federal leases for future oil shale activities.
Shell also holds LNG import capacity rights of 4.6 mtpa at regasification terminals in Maryland and Elba Island in Georgia. In 2008 construction continued on the expansion of the Elba Island terminal where Shell will have 4.2 mtpa of the capacity rights.
Gulf of Mexico
Shell has been operating in the GoM for five decades. Our operations there now provide some 70% of the Shell US oil and gas production. We hold some 440 offshore leases and operate five deep-water tension leg platforms along with a dozen other platforms producing over 300,000 boe/d. Key producing fields are Auger, Mars, Ram Powell, Ursa, Princess, Brutus, NaKika and Deimos.
Shell, with our partners, made significant progress in 2008 on the Perdido project (Shell interest 35.4%) in the south-west GoM. The floating spar was installed in 2,440 m water depth in August and we set a world depth record for an undersea well completion of 2,850 m at the satellite Silvertip Field. Drilling and production platforms were placed on the spar in March 2009. The first production is expected in early 2010, with a projected peak production of 130,000 boe/d.
A waterflood enhanced oil recovery project at the Ursa and Princess fields started in 2008. It is expected to extend field life by 10 years and add 30,000 boe/d of production. A new Mars A8 discovery went into production within a few months from drilling through the existing Mars platform.
In 2008 we added 23 blocks in the Gulf of Mexico through Lease Sales 206, 207 and 224, and an additional 39 blocks in Lease Sale 208 held in March 2009.
A – California, USA
B – Washington, Wyoming, Utah and Colorado, USA
C – South Texas and Gulf of Mexico, USA
D – Alaska, USA
E – Nova Scotia, Canada
F – Alberta and British Columbia, Canada
