CALGARY (CP) -- Devon said Monday it has immediately begun construction on the underground project, the second oilsands development for the Oklahoma-based global energy producer.
Once fully operational in 2012, Jackfish 2 is expected to produce about 35,000 barrels of oil per day, doubling oilsands crude output for the company.
Devon Energy's original Jackfish oilsands project began operations in 2007 and will reach its full production capacity of 35,000 barrels of oil per day in the first half of 2009.
Jackfish 2 will use the Steam Assisted Gravity Drainage, or SAGD, recovery method. Over the life of the project, Devon expects to recover about 300 million barrels of oil from Jackfish 2.
Jackfish and Jackfish 2 are about six kilometres from each other, near Conklin, Alta., about 150 kilometres southeast of Fort McMurray, Alta.
President John Richels said Devon's oilsands operations are a key asset in the company's North American portfolio.
"We are very pleased to have approvals in hand so we can move forward with our second SAGD project," Richels said in a release. "The Canadian oilsands are an important resource we need to tap into to meet the future energy needs of North America. Through the use of SAGD technology, we believe we can access the resource in a way that is efficient and environmentally responsible."
Devon is the only U.S. independent oil company with active operations in the oilsands, and it is among the first in the industry to use SAGD technology, which allows production from reservoirs too deep for conventional oilsands mining.
In SAGD operations, steam is injected into underground reservoirs, heating the thick oil and allowing it to flow to the surface through a collection pipeline. Oilsands mining involves huge open pit operations where giant shovels scoop up oil-laden sand and empty it into giant dump trucks for transport to pipelines and refineries.
In trading on the New York Stock Exchange on Monday, Devon shares fell 47 cents to $95.22.
Devon explores for and produces oil and natural gas, transports oil and gas and natural gas liquids and processes gas. About 60% of the company's production is gas, with the rest oil and liquids such as propane, butane and ethane.
About 90% of Devon's reserves are in North America, but the company also operates in Russia, central Asia, China and Brazil.
(c) Canadian Press