Reuters: Mergers News: UPDATE 1-Shell puts Alberta oil sands project on the block

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UPDATE 1-Shell puts Alberta oil sands project on the block May 28th 2012, 18:16 Mon May 28, 2012 2:16pm EDT * Orion pumps 5,000 bpd from 22 well pairs * Came with acquisition of Blackrock in 2006 * Bids due mid- to late July By Jeffrey Jones and Scott Haggett CALGARY, Alberta, May 28 (Reuters) - Royal Dutch Shell Plc has put an Alberta oil sands project on the block, six years after acquiring it as part of a C$2.4 billion ($2.3 billion) acquisition near the height of the last Canadian energy boom. Shell aims to sell its Orion steam-driven project in northeastern Alberta. Regulators have granted Shell approval for two 10,000 bpd production phases, though current production is just 5,000 bpd, according to Scotia Waterous, the oil major's financial adviser in the sales process. Orion came with the company's acquisition of Blackrock Ventures in 2006. In 2010, Shell took a $1 billion writedown on the assets, which also included holdings in a region called Seal. According to the Scotia Waterous website, the project generated operating income of C$15.6 million in the first quarter of this year. It has been operating for a decade. It is a steam-assisted gravity drainage project, in which the company injects steam into the earth, loosening up the bitumen so it can be pumped to the surface. Production comes from 22 well pairs on an eight-section lease located 30 km (19 miles) northwest of Cold Lake, Alberta. Shell officials were not immediately available to comment on the possible sale, for which bids are due by mid- to late July. It is not the only asset Shell seeks to part with in Canada. Last year, it put its interest in the long-delayed Mackenzie Gas Project in the Far North on the block. It has yet to find a buyer. In oil sands production, Shell is better known for its Athabasca Oil Sands Project, a 255,000-barrel-a-day mining and synthetic crude processing operation in which it has a 60 percent stake. Link this Share this Digg this Email Reprints

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