Shell Starts Output at Canadian Oil-Sand Expansion

Royal Dutch Shell Plc, Europe’s largest oil company, started production at the 100,000 barrel-a- day expansion of its oil sands development in Canada.

The company completed the Jackpine Mine at the project in northern Alberta, adding capacity to the existing Muskeg River Mine’s 155,000 barrels of oil equivalent a day, Shell said today in a statement. Output will rise toward capacity in 2011 once the Scotford upgrader is ready, Shell said.

Canada’s oil sands, a mixture of sand, clay, water and a heavy oil called bitumen, contain the world’s second-largest proven concentration of crude at about 170 billion barrels. Higher oil prices and advances in technology have prompted companies including Shell and BP Plc to invest in tapping Canada’s oil sands.

Shell is targeting an 11 percent increase in production by 2012 to 3.5 million barrels of oil equivalent a day from 2009. The Anglo-Dutch company is also targeting hard-to-reach rock formations for potential fuel in Australia, China and the U.S, as well as projects in Qatar, to boost production growth.

Shell operates the Athabasca Oil Sands Project in which it has a 60 percent stake. Chevron Corp. and Marathon Oil Corp. share the remaining 40 percent.

To contact the reporter on this story: Fred Pals in Amsterdam at fpals@bloomberg.net