Canadian Natural Resources has provided its regular quarterly update on the Horizon Oil Sands Project.
Steve Laut, President and Chief Operating Officer of Canadian Natural commented, "Canadian Natural continues with the completion of the construction, commissioning and staged start up of the Horizon Project where we have made significant progress. We are encountering and overcoming challenges in our drive to complete the Project and commence production of Synthetic Crude Oil. These challenges are primarily related to commissioning and startup of the more complex components of the Project. We have resolved these challenges in the Delayed Coker, the Co-generation Plant and the Hydrogen Plant. We are currently in the process of resolving outstanding matters in the Naphtha Hydrotreater and Gas Oil Hydrotreater in the Secondary Upgrading process. We continue to target first Synthetic Crude Oil production in 2008, but recognize that there must not be any further delays in the completion or commissioning of these complex components of the Project. The construction and operations teams in all areas continue to work together to resolve issues and continue to test and prepare for operations."
Canadian Natural is continuing with the staged start up of the Horizon Project. The seven stages to the start up of the Horizon Project, as outlined in the second quarter update release, and the associated targeted start up dates are as follows:
Stage 1 - Mining
Stage 2 - Steam Supply
Stage 3 - Bitumen Crude Oil Production
Stage 4 - Electricity Generation
Stage 5 - Sulphur Plant/Sour Gas Treating
Stage 6 - Partially Upgraded Crude Oil Production
Stage 7 - 34 degrees API, Light Sweet Synthetic Crude Oil Production
Commenting on third quarter progress, Real Doucet, Senior Vice President, Oil Sands, stated "The majority of the processing plants are either fully commissioned or well into commissioning. The remaining work is being carefully managed, to ensure a successful project by having all the necessary systems operational for cold weather. The safety and well-being of our contractors and operations staff remains a priority. Our on-site manpower is ramping down as we have reduced our construction workforce by over 50% during Q3/08 to approximately 2,500 tradesmen currently on site. The necessary operators required for start up and a strong management team are all in place."
A high level overview of progress by major plant facility at the Horizon Project is as follows:
The delays experienced and extended commissioning schedule has lead to an increase of $441 million to the Project forecast construction costs. This results in the revised total cost estimate for Phase 1 of the Horizon Project to be approximately $9.7 billion. The targeted on-stream cost estimate is $88,200 bbl/d capacity, including the benefits of the significant pre-build capital invested for future phases. Although Canadian Natural is disappointed with the increase to the overall targeted project cost, the Company wants to ensure that it is done right, with the safety of the staff and contractors, along with the quality of the operation, always in mind.
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