PetroChina to Invest $1.9 Billion in Canadian Oil Sands

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Researched by Industrial Info Resources (Sugar Land, Texas)--PetroChina International Investment Company Limited, a wholly owned subsidiary of PetroChina Company Limited (NYSE:PTR) (Beijing) has entered into a series of agreements with Athabasca Oil Sands Corporation (AOSC) (Calgary, Alberta) in which PetroChina will acquire a 60% working interest in AOSC's MacKay River (formerly Thickwood) and Dover oil sands projects for a consideration of CAD$1.9 billion. Both projects are located in the center of the Athabasca area in northern Alberta. The two projects are believed to have a combined total of approximately 5 billion barrels of best-case contingent bitumen.

PetroChina's 60% interest is only in AOSC's MacKay River and Dover projects, and not in the entire privately held company. PetroChina's stake in these projects is approximately 3 billion barrels of the total resource. AOSC's remaining interest in MacKay River and Dover and other oil sands projects remains approximately 7 billion barrels. The two projects that are the target of the joint venture will require roughly CAD$15 billion to CAD$20 billion in investment to get a production total of between 300,000 and 500,000 barrels per day (BBL/d) utilizing steam-assisted gravity drainage (SAGD) technology to bring the resource to the surface.

AOSC is currently moving ahead with pilot testing at the two locations and will determine which pilot plant will move forward first. The capacity of the pilot plants is approximately 2,000 BBL/d, and each will require a capital investment of roughly CAD$30 million to put into service. AOSC has filed regulatory applications for the two pilot plants, and the AOSC intends to file a regulatory application with Alberta's Energy Resources Conservation Board at the end of 2009 for the first 35,000-BBL/d commercial-scale production plant at MacKay River. AOSC has retained the services of IMV Projects Incorporated (Calgary) for the engineering, procurement and construction management for the pilot plant projects. AOSC plan to put more than 500,000 BBL/d of bitumen production into service between 2014 and 2021.

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