Nexen Ramps Up Production with SAGD at Long Lake

Nexen Inc. announced that the Long Lake project is proceeding well with several significant achievements to date.

At the end of May, there were 34 well pairs in SAGD production and the producing wells are meeting expectations with oil rates increasing and steam-oil-ratios (SOR) decreasing. At this stage of the ramp-up process, with some of the well pairs on SAGD operation producing bitumen and others still circulating steam, the overall SOR is currently at about 5.0. The 34 well pairs that have been converted to SAGD operation are averaging 10,000 bbls/day of bitumen production at an aggregate SOR of less than 3.5.

This is in-line with our long-term expectation that our SOR will continue to decrease to approximately 3.0 when peak rates are achieved in 2009. Water treatment capacity is ramping up and the second cogeneration unit is now in operation. This will provide more steam generation capacity allowing us to convert additional wells and further ramp-up production. We continue to expect to have sufficient bitumen feedstock to start-up the upgrader later this summer. SAGD volumes are expected to continue ramping-up through the remainder of 2008 and reach the full design rate of 72,000 bbl/d in 2009.

Excellent progress has been made on upgrader commissioning in the past several months with over 70 percent completed to date. Synthetic crude and pentane have been loaded into the OrCrude unit and testing in this unit is advancing well. Introduction of first bitumen into the OrCrude unit is planned for later this month. Catalyst loading is complete in the hydrocracker and the sulphur recovery units with these units moving into the final commissioning steps required before start-up activities commence. In the gasification unit, automation testing activities are progressing with our licensor, Shell Global Solutions.

As previously announced, a holding tank used to balance liquid oxygen flow between the air separation plant and the gasifier was damaged in the commissioning process. After a detailed inspection of the tank, we determined that the roof required replacement. The roof has been removed and construction of a new roof is underway with repairs expected to be complete early in the third quarter. The remainder of the air separation unit is ready for start-up and liquid oxygen has already been successfully produced. Start-up of the upgrader will follow once repairs are completed with first commercial production expected late summer.

The Long Lake project is being jointly developed by Nexen Inc. and OPTI Canada Inc. (TSX:OPC).

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