UPDATE 3-Devon starts phase 2 of Alberta oil sands project
Mon Sep 8, 2008 5:23pm EDT
CALGARY, Alberta, Sept 8 (Reuters) - Devon Energy Corp (DVN.N: Quote, Profile, Research, Stock Buzz) is embarking on the second phase of its Alberta oil sands project, a $1-billion-plus expansion aimed at doubling output in four years, the U.S. oil independent said on Monday.
Devon said it won regulatory approval for phase two of the steam-driven Jackfish project, which will add 35,000 barrels a day of production of tar-like bitumen by 2012. It will start construction immediately.
The cost of the project is estimated at more the $1 billion, with inflation in Alberta's booming oil sands sector not expected to abate, Devon spokesman Chip Minty said.
The $730 million first stage of Jackfish, located south of the oil sands hub of Fort McMurray, in northern Alberta, started up last year and is expected to pump out 35,000 barrels a day during the first half of 2009, the company said.
Oklahoma City-based Devon is one of a raft of oil companies developing Alberta's oil sands, where the size of the resource is second only to Saudi Arabia's conventional reserves, but is far more complicated and expensive to produce.
Unlike the major oil sands mining developments, the heavy crude at Jackfish is produced using a method called steam-assisted gravity drainage. It involves injecting steam into the reservoir, which loosens up the oil so it can be pumped to the surface in wells.
Devon shares fell 65 cents to $95.04 on the New York Stock Exchange. (Reporting by Jeffrey Jones; Editing by Peter Galloway)
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