Project Profile
Value: US$1.6 billion
Location: Adjacent to the current Demonstration Project, Hangingstone area, Province of Alberta, Canada
Contingent resources: 911 million bbl (best estimate)
Production: 80,000 bbl/d
Start-up Year: 2Q 2015
Start-up (expansion): August 2017, full capacity expected in mid-2018
Japan Petroleum Exploration Co, Ltd. (Japex) has made the Final Investment Decision (FID) on an oil sands project in the Hangingstone area in the Province of Alberta, Canada named Hangingstone Oil Sands Project. Japan Canada Oil Sands Ltd. (JACOS), a consolidated subsidiary of Japex, currently produces 6,000 to 7,000 barrels per day of bitumen (ultra heavy crude oil extracted from oil sands) at Hangingstone Demonstration Project area. The Hangingstone Project is a joint venture project to develop an area adjacent to the current Demonstration Project. JACOS holds a 75% participating interest as the operator, while Nexen holds the remaining 25% interest. 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.
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. A decision on expansion of the facilities to bitumen production capacity of approximately 30,000 barrels per day will be made after start-up of the operation. Bitumen production will continue for around 30 years using the steam-assisted gravity drainage (SAGD) method, which has already been utilized at the Hangingstone Demonstration operation for more than 10 years. JACOS’ produced bitumen will be diluted by ultra-light crude oil such as condensate and sold as diluted bitumen equivalent to heavy crude oil through pipelines mainly to refineries in U.S.A.
Total costs for the initial development are anticipated to be around US$1.5 billion which will be covered by own funds and bank loans. JACOS will commence development work immediately after FID. Nexen has approved the design and execution plan for the Hangingstone Project allowing the project to move forward, and is anticipated to make a final FID decision with regard to their share of the development during the first quarter of 2013.
In 2010 Athabasca Oil Sands Corp. entered into an agreement to purchase oil sands company Excelsior Energy Ltd. for US$144 million.
The project represents JAPEX\'s largest investment outside Japan, and the largest in Canadian subsidiary Japan Canada Oil Sands\' (JACOS) 40-year tenure in Alberta.
Operators:
JACOS (subsidiary of Japan Petroleum Exploration (JAPEX)): 75% interest
Nexen (subsidiary of CNOOC Ltd.): 25% interest
Contractor:
Enbridge Inc: Construct facilities and provide transportation services
Aquatech: Contract to provide its evaporator technology for the JACOS (Japan Canada Oil Sands Ltd.) Hangingstone Expansion Project in Alberta, Canada. Aquatech\'s Vertical Tube Falling Film (VTFF) evaporator technology will be used to treat and recover over 95% of the OTSG (Once-Through Steam Generator) blowdown to supply as boiler feedwater make-up for JACOS\' heavy oil production facility.
Inter Pipeline Ltd: Contract to provide diluent transportation services under the initial term of the 20-year ship-or-pay agreement, Inter Pipeline will provide 7,000 barrels per day (\"b/d\") of committed capacity on its Polaris pipeline system through the existing Polaris 12-inch diameter diluent mainline