CALGARY (CP) -- OPTI Canada Inc. filled in some of the blanks Wednesday about its $3.5 billion oilsands joint venture with Nexen Inc., saying it expects to develop 240,000 barrels per day of premium sweet crude production in the project.
In an update describing progress for Canada's fourth integrated oilsands project, OPTI Canada [TSX:OPC] said the first steam-assisted production phase of the Long Lake project is scheduled to start in late 2006 and the upgrader startup is set for mid-2007.
''That's a pretty big number for a SAG-D (Steam Assisted Gravity Drainage) project. You know in the mining projects you usually see them come out in 100,000 barrel a day phases,'' said energy analyst Kyle Preston from Salman Partners Inc.
''But they've got a number of leases there and they've had the mining engineers evaluate their leases and according to Nexen they believe they have 14 billion barrels of bitumen in place,'' he said.
Formal approval of Phase 2 is anticipated to occur by early 2008.
OPTI and Nexen [TSX:NXY; NYSE:NXY] hold a 50% interest in the joint venture.
Future phases are planned to be of a similar size and design to the Long Lake project and consists of integrated steam-assisted gravity drainage and OrCrude upgrader projects.
''The success to date of our Long Lake project, a direct result of our unique technology and well-defined execution strategy, provides us with the confidence to proceed with plans for future phases of growth to develop our extensive resource base,'' Sid Dykstra, chief executive of OPTI, said in a release.
''Our patented integrated process, which substantially eliminates the requirement to purchase natural gas, provides a significant competitive advantage and we are well-positioned for outstanding growth potential.''
If the OrCrude process is successful the project would turn out to be very profitable for OPTI and Nexen according to Preston.
''They're out there in the marketplace saying we're going to have the lowest operating costs because we essentially do not have to use any natural gas in the process,'' he explained.
''I think the company has come out and said they expect operating costs to be in about the $7 or $8 (per barrell) range whereas most other integrated oilsands projects these days are kind of in the mid-teens,'' Preston said.
OPTI Canada completed approximately 60 per cent of the detailed engineering and design on the project last year.
About 2,300 people have been working on the engineering, planning and initial construction activities including module fabrication.
(c) The Canadian Press 2005
