Connacher Oil & Gas Limited Nears Completion of Algar Oil Sands Project

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Researched by Industrial Info Resources (Sugar Land, Texas)--Connacher Oil & Gas Limited (TSX:CLL) (Calgary, Alberta) expects to complete construction on the new 10,000-barrel-per-day (BBL/d) Algar bitumen production and processing plant in May 2010. The completion of the $391 million project will mark the second 10,000-BBL/d bitumen production facility that Connacher has brought online in the past three years. The Great Divide plant, bearing the same name as Connacher's property, came online in late 2007.

When completed in May, Connacher will begin steam production at Algar in preparation for steaming the oil sands to loosen the bitumen locked in the formation, utilizing steam assisted gravity drainage (SAGD). A further nine to 12 months of steaming the resource will be needed to fully reach Algar's nameplate capacity of 10,000 BBL/d. The engineering & construction contract for the Algar production field & processing plant was executed by Bower Damberger Rolseth Engineering Limited (Calgary).

In conjunction with the completion of Algar, Connacher Oil & Gas has revived plans for the next phase of expansion, once referred to as POD III. Connacher Oil & Gas not only revived the once proposed expansion, but is now planning to increase the project scope from 10,000 BBL/d to between 20,000 and 25,000 BBL/d. The expansion will be placed into service as an add-on to the Algar plant rather than a stand-alone production facility. The new and larger project will take Algar to a production capacity of 30,000 to 35,000 BBL/d of bitumen. Connacher Oil & Gas expects to file its regulatory permits with the government for the new expansion in the second quarter of 2010. Construction on the expansion project could begin as early as 2012, with a completion date targeted for in 2014.

As Connacher Oil & Gas proceeds with this expansion, the company will also examine the possibility of reviving a proposed diluted bitumen pipeline interconnection project to tie the Great Divide property into the bitumen pipeline system. Connacher Oil & Gas currently trucks its bitumen production to market. Production growth from the current 10,000 BBL/d to possibly 40,000 to 45,000 BBL/d by 2014 could very well drive the construction of a new 50- to 70-kilometer pipeline to bring further economy of scale to the Great Divide property.

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