Chevron Corp. will participate in Shell Canada Ltd.'s plans to expand the Athabasca oil sands project in Alberta, despite a multibillion-dollar surge in capital costs, the oil major said.
Chevron's approval of the expansion, which will boost output at the northern Alberta operation to 255,000 barrels a day from 155,000, follows that of partner Western Oil Sands Inc. on Wednesday.
With its 20 percent stake, Chevron estimated its share of project costs at about $2 billion.
Western also has a 20 percent interest and Shell has the remainder and is operator.
In July, Shell said the cost of the project could be between C$10 billion and C$12.8 billion ($8.9 billion and $11.4 billion), up from a previous projection of about C$7 billion.
It blamed the jump on Alberta's overheated construction scene amid a rush to develop oil sands projects. The boom has stretched the labor force and fueled inflation in materials costs.
But Shell said it still expected attractive returns.
The expansion phase includes construction of mining and bitumen extraction facilities at the Jackpine mine, north of Fort McMurray, Alberta, and an expansion of the Scotford upgrader near Edmonton.
Chevron's approval of the expansion, which will boost output at the northern Alberta operation to 255,000 barrels a day from 155,000, follows that of partner Western Oil Sands Inc. on Wednesday.
With its 20 percent stake, Chevron estimated its share of project costs at about $2 billion.
Western also has a 20 percent interest and Shell has the remainder and is operator.
In July, Shell said the cost of the project could be between C$10 billion and C$12.8 billion ($8.9 billion and $11.4 billion), up from a previous projection of about C$7 billion.
It blamed the jump on Alberta's overheated construction scene amid a rush to develop oil sands projects. The boom has stretched the labor force and fueled inflation in materials costs.
But Shell said it still expected attractive returns.
The expansion phase includes construction of mining and bitumen extraction facilities at the Jackpine mine, north of Fort McMurray, Alberta, and an expansion of the Scotford upgrader near Edmonton.
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