Japan Petroleum to expand Canadian oil sands project

Thu May 8, 2008 4:00pm EDT
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CALGARY, Alberta (Reuters) - Japan Canada Oil Sands Ltd, a unit of Japan Petroleum Exploration Co said on Thursday it plans to expand its Canadian oil sands operation to produce up to an additional 35,000 barrels a day by 2014.

The company, which has run a pilot project for the Hangingstone oil sands operation for the past 10 years, said it would seek regulatory approval for the expansion of its thermal oil sands project in 2010.

Its current operation produces about 8,000 barrels of tar-like bitumen per day.

Yukio Kishigami, executive vice-president of Japan Canada Oil Sands, said the company is not yet ready to detail the cost of the expansion. A budget will be produced as it completes work leading to the regulatory application.

The Hangingstone expansion is the latest in more than C$100 billion in projects planned or underway in the oil sands region of northern Alberta, which contain the biggest oil reserves outside of the Middle East. Production from the region is set to nearly triple to 3 million barrels a day by 2015.

The project is one of just a few investments by Japanese companies in the region. Last year, INPEX Holdings Inc agreed to buy a 10 percent in Total SA's Joslyn oil sands project and a unit of Nippon Oil Corp owns a minor stake in the Syncrude Canada joint venture.

While the Joslyn project will mostly use mining technology, Hangingstone, 50 kilometers (31 miles) southwest of Fort McMurray, Alberta, will use steam-assisted gravity drainage, or SAGD.

The SAGD method pumps steam into the ground to liquefy the tarry bitumen so it can flow to the surface.

Japan Canada Canada Oil Sands has a 75 percent stake in the property, while Nexen Inc, Canada's No. 4 independent oil producer, holds the remainder.

($1=$1.02 Canadian)

(Reporting by Scott Haggett; editing by Renato Andrade)