April 29, 2010 / 3:17 PM / 10 years ago

Shell not planning oil sands expansion - paper

* Shell plans no expansions in oil sands

* Expects to boost output from existing ops (In U.S. dollars unless noted)

CALGARY, Alberta, April 29 (Reuters) - Royal Dutch Shell Plc (RDSa.L) has no plans to quickly expand its oil sands operations, focusing instead on tweaking output from its existing investments, the head of Shell’s U.S. arm told a Canadian newspaper.

In an interview with the Globe and Mail’s editorial board, Marvin Odum, president of Shell Oil Co, said the company was unlikely to launch a major expansion of its 60 percent-owned Athabasca oil sands project because new projects in the region, which contains the largest crude reserves outside the Middle East, are too expensive.

Shell’s chief executive, Peter Voser, has also said the company has no near-term plans to expand its oil sands project.

Shell has nearly completed a 100,000 barrel per day expansion of the Athabasca project, which currently produces 155,000 bpd. The costs of the project was last pegged at $14.3 billion ($14.2 billion), well ahead of the original estimate of between C$10 billion and C$12.8 billion.

Rising costs and falling oil prices forced the delay or cancellation of about C$90 billion of oil sands projects during the recession. However the lower number of projects freed up skilled labor and improved productivity, lowering construction costs.

Over the past year, Shell’s rivals in the region, including Imperial Oil Ltd (IMO.TO), Total SA (TOTF.PA), Suncor Energy Inc (SU.TO) and others have said they will go ahead with their planned projects.

However Odum told the Globe that Shell would instead look to boost output from its existing operations, which could add another 30,000 to 80,000 bpd of production.

The Athabasca project includes an oil sands mine near Fort McMurray, Alberta, and an upgrader to convert the mined bitumen into refinery-ready synthetic crude. Marathon Oil Corp (MRO.N) and Chevron Corp (CVX.N) each hold 20 percent stakes in the project.

$1=$1.01 Canadian Reporting by Scott Haggett; editing by Rob Wilson

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