Nexen provides Long Lake Project update

Nexen Inc. announces that the Long Lake project is proceeding well and the upgrader remains on track for start up and first production of Premium Synthetic Crude (PSC(TM)) this month.
Commissioning is over 90 per cent complete and the final major activity, testing of the gasifiers, is underway. Repairs to the liquid oxygen storage tank and the air separation plant are complete and are fully operational. Other units in the upgrader, including the OrCrude(TM) unit, hydrocracker, and sulphur recovery unit are operationally ready to start up.
 
Based on commissioning activities and an evaluation of operational readiness, start up the upgrader with approximately 23,000 to 25,000 bbls/d of bitumen feedstock. When we combine our current SAGD production with externally sourced bitumen, we have sufficient volumes to start up this month. The upgrader is designed to produce approximately 60,000 bbls/d (30,000 bbls/d net to us) of PSC(TM). We expect production of synthetic crude to ramp up to full rates over a 12 to 18 month period following upgrader start up.

With respect to SAGD operations, the reservoir is performing well and our well conversions to production are on track with 40 wells converted to date. However, our production ramp up schedule has been impacted by a number of surface issues. In late-June, an unexpected third-party transformer failure on the main electrical grid caused us to shut down our SAGD facilities and wells for a period of time. In mid-July, transfer pumps failed on a third-party pipeline. As our storage tanks were full, we had to temporarily ramp down production and shut in some wells. In August, a number of valves controlling steam rates and pressure into the well pads failed. Start-up issues are not unusual. We are solving them and they are not recurring. For example, we have mitigated our exposure to third-party power outages. Recently, we were able to successfully isolate and operate our co-gen units during a planned power outage. These units supply power to the site and any excess power generated is sold into the grid.
 
The start-up issues we encountered limited the amount of steam that we were able to inject into the reservoir over the last two months and our ability to consistently produce wells to their capability. Steam injection directly impacts bitumen production, therefore each time our steam is interrupted, our bitumen production temporarily decreases and takes time to ramp back up. These issues had a significant impact on average monthly production volumes in July and August, however, the reliability of our surface facilities is improving and gross bitumen production volumes have been increasing over the last three months as follows:
 
 
The Long Lake project is being jointly developed by Nexen Inc. and OPTI Canada Inc.
 
Source: Nexen Inc.