Nexen provides Long Lake Project update

Canadian-based Independent energy company Nexen Inc. has provided update on Phase 1 of its Long Lake development project. The commissioning and start up of the SAGD plant and wells is underway.

The company is currently injecting steam into 4 of the 10 well pads and expect to be steaming all well pads by the end of September. SAGD performance at Long Lake is as expected or slightly better and the company expect bitumen production to ramp up to full rates over the next 12 to 24 months.

Commissioning activities have commenced on completed units of the upgrader and these activities will expand as additional units are completed. Utility steam boilers are currently being commissioned with start up expected during the third quarter of 2007. While full start up of the upgrader will follow the commissioning phase, this cannot take place until the sulphur recovery unit is complete and ready for operation.

As a result of these construction delays and the extended start up schedule, the capital cost for the project is expected to increase by 10 to 15 percent over the previous forecast of $5.3 billion ($2.65 billion net to Nexen). The key risks in this cost estimate continue to be the pace of completion of the sulphur recovery unit, access to labour, workforce productivity and the pace of commissioning activities.