December 24, 2012

Japanese firm plans to invest $1.4 billion in oilsands

RICHARD GILBERT

staff writer

Japan Petroleum Exploration Co. Ltd. (Japex) is planning to invest $1.4 billion for the construction of a thermal oilsands project south of Fort McMurray, Alberta.

“Completing the front end engineering design and obtaining Scheme Approval from the Alberta provincial government in November, 2012, the partners will now commence full-scale development work, aiming at production start-up in the first half of 2016,” said Japex president Osamu Watanabe.

“Considering investment timing and technical risks, the partners have decided to adopt a staged development approach. More specifically, the initial stage will result in bitumen production capacity of around 20,000 barrels per day.”

The board of directors of Japex made the final investment decision to move forward with the oilsands project on Dec. 14

Japan Canada Oil Sands Ltd. (JACOS), a consolidated subsidiary of Japex and its partner, Nexen Inc., propose to construct and operate an in-situ oilsands steam-assisted gravity drainage (SAGD) project situated on the Hangingstone lease area about 52 kilometres southwest of Fort McMurray. The proposed development is an expansion of JACOS’s existing Hangingstone Demonstration project, which currently produces 6,000 to 7,000 barrels per day of bitumen.

However, surface features such as Horse Creek favour the construction of a new facility rather than expanding existing facilities.

The major components of the expansion project include:

a Central Processing Facility (CPF) consisting of seven once-through steam generators, production processing, water treatment and recycling facilities, solid waste handling and disposal. The CPF will be developed as a standalone facility in a single phase about 4 kilometres south of the demonstration project;

associated water supply and liquid disposal facilities, a proposed landfill and other infrastructure;

26 wellpads consisting of a total of 175 well pairs required to supply production to the CPF over the projected 25-year project life;

associated network of pipelines and roadways connecting the wellpads to the CPF;

camps for drilling, construction and operation, construction laydown areas and civil storage areas;

an all-weather-road connecting the CPF to the existing Highway 63 intersection;

infrastructure expansion to the site including a natural gas pipeline, diluent and diluted bitumen pipelines and power transmission.

The scope of the proposed expansion will increase capacity by more than 300 per cent.

The development of the Hangingstone Project will establish the oilsands as one of Japex’s core business areas.

Japex also plans to consider the possibility of developing other oilsands leases, including Corner and Chard in the future.

JACOS started production utilizing the SAGD method in 1999.

With the support of the Japanese government and industry has been conducting various demonstration tests for finding methods that work for commercial bitumen production in the Canadian oil sands region.

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