Barely more than a week into bitumen production, operations at Shell Canada‘s (SCH-T) Muskeg River mine about 75 km north of Fort McMurray, Alberta, have been halted following some “minor” explosions and resulting fire in the early morning of Jan. 6.
The explosions occurred in the mine’s froth treatment area, where the bitumen is cleaned before being piped to the Scotford upgrader, beside Shell’s Scotford refinery, near Fort Saskatchewan for processing into synthetic crude oil.
No one was seriously injured.
The cause of the explosions and fire, which took to hours to douse are being investigated. No timetable for a resumption of operations was offered.
The mine is part of the Athabasca Oil Sands Project, a joint venture between Shell Canada (60%), ChevronTexaco (CVX-N) and Western Oil Sands (WTO-T) with 20% apiece.
At full steam, the project is expected to produce 155,000 barrels of synthetic crude oil daily — enough to cover up 10% of Canada’s oil needs. Muskeg River hosts an estimated resource of 1.65 billion barrels bitumen. The initial mine life is projected at 30 years.
The fire is the latest trial for the project, which has seen initial capital estimates nearly double to $5.7 billion. The increase is attributed to a shortage of labour thanks to the volume of construction in the oil and gas industry.
Shell Canada’s shares dropped $1.20 to $48.48 in Toronto on Jan. 6.
The Anglo-Dutch Royal Dutch/Shell Group owns 78% of Shell Canada.
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