Nexen Moves Forward with Long Lake Oil Sands Project

Nexen Inc. provides the following update with respect to its Long Lake oil sands project.

Final pre-operational testing of the upgrader is ongoing. The two gasifier trains necessary for start-up have been test-fired with vacuum residue feed in September and testing continues. Once all testing is completed in the gasification unit, we will be ready to begin the coordinated and integrated start-up of all the upgrader units. The air separation unit is operational, supplying combustion air, liquid oxygen and nitrogen to support gasifier test firing. In the OrCrude(TM) unit, the distillation units are operating, supplying vacuum residue for gasifier testing with the remainder of the unit ready for start-up. First production of Premium Sweet Crude (PSC(TM)) is now expected in October.

A number of issues with respect to water treatment and steam generation previously described have been resolved, resulting in a significant ramp-up in steam production. The reliability of our steam-assisted gravity drainage (SAGD) facilities is improving and gross bitumen production during the first half of September averaged 13,200 bbls/d compared to an average of 11,600 bbls/d in August.

Bitumen production volumes for the second half of the month were impacted by a three-day plant power outage as well as required repairs to a field emulsion pipeline. When we combine our current SAGD production levels with externally sourced bitumen, we expect to have sufficient volumes to start-up the upgrader. We expect to reach full design rates of 72,000 bbls/d of bitumen production, upgraded to approximately 60,000 bbls/d of PSC(TM) in early 2010.

The Long Lake project is being jointly developed by Nexen Inc. and OPTI Canada Inc.


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