As at September 30, 2006, the remaining cost to complete the Project was $623 million. With the projected 2007 investment of $379 million, approximately $209 million is forecast to be incurred in the fourth quarter of 2006 and approximately $35 million is anticipated to be incurred in 2008.
"Our 2007 capital program is directed toward the completion and start-up of Long Lake Phase 1," said Sid Dykstra, President and Chief Executive Officer of OPTI. "In addition, in 2007 we plan to continue to invest in our future growth. With a land position of over 370 sections on our three leases, a solid financing plan, and the experience of building Phase 1, OPTI is well positioned to continue with our phased development plan to achieve our target of 120,000 barrels per day of Premium Sweet Crude."
Phase 1 On-track to Achieve 2007 Milestones; Company Provides 2007/2008 Production Guidance
SAGD construction is approximately 95 percent complete. The Project is on-track for SAGD first steam injection into the reservoir in the first quarter of 2007, with bitumen production ramping up to peak rates over a 12 to 24 month period. The first six months of SAGD operations will primarily focus on heating the reservoir. By the end of 2007, we expect bitumen production rates of between 35,000 and 45,000 bbl/d (between 17,500 and 22,500 bbl/d net to OPTI) with a steam oil ratio (SOR) of below 4.0 as initial steaming of the reservoir takes place. During 2008, SAGD volumes are expected to continue to ramp-up with completion of the additional steam capacity facilities and Long Lake SAGD operations are expected to reach full design capacity of 72,000 bbl/d in late 2008 or early 2009. The long-term average forecast SOR for the Project is 3.0.
Approximately 75 percent of Upgrader construction is complete. The Upgrader is forecast to commence operations late in the third quarter of 2007 with initial volumes of synthetic crude in the fourth quarter of 2007. Peak output of Premium Sweet Crude (PSC(TM)) is expected within six to 18 months of Upgrader start-up. It is expected that the capacity of the Upgrader during ramp up will allow us to process all the forecasted SAGD volumes. As a result, the Project is expected to be producing at full capacity of 58,500 bbl/d of sales, comprised of approximately 57,700 bbl/d of PSC(TM) and 800 bbl/d of butane, in late 2008 or early 2009.
Planning for Future Growth OPTI and its joint venture partner, Nexen, own three leases in the Athabasca oil sands region: Long Lake, Leismer and Cottonwood. Phase 2 is continuing to advance with the same design as Phase 1. The south end of the Long Lake lease will be the location of the SAGD portion of Phase 2 of the Long Lake Project and we have completed seismic and core hole drilling programs to support this development. Regulatory approval is in place for the Phase 2 Upgrader and the application for SAGD regulatory approval will be submitted before year end.
Development of the Phase 2 execution strategy, cost estimate and project schedule continues with the plan of reaching a level of approximately 30 percent of engineering complete prior to the anticipated sanctioning of Phase 2 in early 2008. This level of engineering is significantly higher than that of Phase 1 at the time the project was sanctioned. This is intended to ensure a high degree of certainty on cost and execution strategies and maintain capital discipline in light of the very active oil sands construction environment.
During the 2006-2007 winter season a program of 130 core holes and 40 square miles of 3D seismic are planned on our lands to advance future phases of growth.
Proposed Financing Plan Expected to Close by Year-end
Completion of the transactions relating to the proposed financing plan recently announced by OPTI is anticipated prior to year-end.
OPTI Canada Inc. is a Calgary, Alberta-based company focused on developing the fourth and next major integrated oil sands project in Canada, the Long Lake Project, in a 50/50 joint venture with Nexen Inc. The first phase of the Project consists of 72,000 barrels per day of SAGD (steam assisted gravity drainage) oil production integrated with an OPTI-operated upgrading facility, using OPTI's proprietary OrCrude(TM) process and commercially available hydrocracking and gasification. Through gasification, this configuration substantially reduces the exposure to and the need to purchase natural gas. The Project is expected to produce 58,500 bbl/d of products, primarily 39 degrees API premium sweet crude with low sulfur content, making it a highly desirable refinery feedstock.
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