Nexen, OPTI Receive Approval for Long Lake Oil Sands Project

Nexen Inc. and OPTI Canada Inc. have received approval from the Alberta Energy and Utilities Board and legislative assent from the Province of Alberta to proceed with the $3.0-billion Long Lake oil sands project.

In its decision, the EUB praised the companies' efforts to engage local communities in their project planning. "The Board commends OPTI and Nexen for their proactive approach to consultation and their success in reaching agreement and understanding with a number of aboriginal communities and other stakeholders."

"This is great news," said Gary Nieuwenburg, Vice President, Synthetic Crude for Nexen. "Securing approval without a hearing is a major milestone for the Long Lake Project that reflects the joint-venture partners' commitment to involve community stakeholders and regulatory authorities from the outset of the project."

"With regulatory approval in place we are continuing our efforts to allow the partners to make a final commercial decision on the Long Lake Project by the end of the year," said Sid Dykstra, President & CEO of OPTI. "The input we've received has resulted in enhancements to the project and we will continue to actively collaborate with our stakeholders as we move forward."

The Long Lake Project, located 40km southeast of Fort McMurray in northern Alberta, is a 50/50 joint venture of OPTI and Nexen. The first phase of the project consists of 70,000 barrels per day of steam assisted gravity drainage oil production, integrated with an upgrading facility using patented OrCrude(TM) upgrading technology combined with commercially available hydrocracking and gasification. The Long Lake lease has a long reserve life, will provide steady cash flow, and has ample capacity to expand beyond this first phase of the project.

The project will produce an end product of 38-degree API premium synthetic crude with very low sulphur content, making it a highly desirable refinery feedstock. Production from the Long Lake Project is planned to start in 2006 with the upgrader commencing operation in 2007.