PanCanadian and Value Creation Sign Oil Sands Agreement

PanCanadian Petroleum Limited has signed an agreement with Value Creation Inc. to jointly advance upgrading technology, potentially leading to joint venture integrated development of oil sands reserves. When successfully achieved, this technology could significantly improve the return of PanCanadian's Christina Lake development.

Value Creation is developing a novel partial upgrading process that has been tested with encouraging results at a small pilot plant scale. If positive demonstration and commercial results are achieved, it would represent a significant breakthrough in the transformation of bitumen and heavy oil into more marketable crude oils. This innovative process would enable upgrading to be done at a lower capital cost than current technology. It would produce higher value grades of crude oil, reduce or eliminate the need for diluent in transportation and produce energy that would reduce the use of expensive natural gas fuel. This process may also provide significant sustainable development benefits by lowering greenhouse gas emissions and improving resource utilization.

"If successful, this process provides an opportunity for us to greatly enhance value at our Christina Lake development, and could be used elsewhere to develop Alberta's vast oil sands resources," said David Tuer, PanCanadian President and Chief Executive Officer. "We hope to be in a position to consider a commercial-scale plant as early as 2002." Adds Dr. Columba Yeung, Chief Executive Officer of Value Creation: "We are excited to partner with a premier energy company such as PanCanadian and look forward to a successful venture."

"This agreement includes a global area of mutual interest which, if PanCanadian elects to proceed, provides the opportunity for both parties to participate in future applications of this technology in heavy oil field and refinery development," said PanCanadian Senior Vice President Gerry Protti. "Value Creation has a strong core team of top caliber experts and world-class alliances. Dr. Yeung is well known for his excellence and innovation in the oil sands technology development community."