CALGARY, Aug. 30 /CNW/ - OPTI Canada Inc. (OPTI) announced today the
following project update on Phase 1 of its Long Lake Project (the Project).
Commissioning and starting up of the SAGD plant and wells continues.
Steaming has commenced on 4 of 10 well pads with all of the well pads expected
to be steaming by the end of September, a month later than previously forecast
due to the time required to complete all commissioning and start-up
activities. It is anticipated that SAGD volumes will ramp-up to full capacity
over a 12 to 24 month period.
Progress on portions of Upgrader construction has been slower than
previously forecast. Construction is expected to be complete on the
hydrocracker, OrCrude(TM) unit and all main plant utilities in the third
quarter of 2007, in-line with previous expectations. Completion of the
gasifier and air separation units is expected to extend into the fourth
quarter due to lower than expected productivity combined with increases in the
amount of work required to complete construction. Completion of the sulphur
plant has been extended into the first quarter of 2008 due to similar factors
as well as difficulties in securing sufficient labour, primarily pipefitters,
to advance this unit. Piping is now substantially complete and labour for the
remaining work is expected to be in sufficient supply.
Commissioning activities are underway in the completed areas of the
plant, and these activities will continue to expand as units reach
construction completion. Utility steam boilers are currently being
commissioned and are expected to start-up during the third quarter of 2007.
Full start-up of the Upgrader will follow commissioning but cannot occur until
the sulphur plant is complete and ready for operation. OPTI is committed to
following a rigorous and orderly start-up process intended to maximize safe
and reliable operations. As a result, start-up activities for the Upgrader are
now forecast to occur in the first and second quarter of 2008, with first
production of synthetic oil anticipated late in the second quarter. The
Upgrader is expected to reach full production capability about 12 to 18 months
Capital Costs and Funding
As a result of these challenges, the capital cost for the Project is
expected to increase by 10 to 15 percent over the previous forecast of
$5.3 billion. To the end of July 2007, $4.86 billion had been incurred on the
Project. The key risks in the estimate continue to be the pace of completion
of the sulphur plant, access to labour, productivity and the pace of
commissioning activities for the various units.
OPTI's 50 percent share of Phase 1 remains funded based on OPTI's working
capital and an undrawn $500 million revolving credit facility. Core hole
drilling, engineering and planning for Phase 2 and future phases will continue
and is expected to be funded with an appropriate balance of equity and debt.
OPTI is currently preparing its 2008 capital and operating budget and expects
to provide guidance on 2008 production volumes later this year.
"Both the delay in start-up and the capital cost increase are
disappointing," said Sid Dykstra, President and Chief Executive Officer of
OPTI. "However, the Long Lake Project continues to have attractive economics.
Using our proprietary process, we expect to benefit from a significant
operating cost advantage on a project that is designed to produce
approximately 60,000 bbl/d of synthetic oil for over 40 years."
Conference Call and Webcast
As previously announced, OPTI will host a conference call and webcast on
Friday, August 31, 2007, at 6:00 a.m. Mountain Time to discuss this update. To
participate in the conference call, dial:
(403) 410-9170 Local
(866) 898-9626 North American Toll-Free
(800) 8989-6323 Global Toll-Free
It is advised to call in ten minutes prior to start time. A recording of
the conference call will be available approximately two hours after the event
until 6:00 a.m. Mountain Time, September 6, 2007. To listen to the audio
replay, call (416) 695-5800 or toll-free at (800) 408-3053, and enter passcode
3233481 followed by the number sign. The conference call will be available via
live and archived webcast. The webcast will be located under "Presentations
and Webcasts" in the For Investors section of the OPTI website at
www.opticanada.com and will be archived for 30 days.
OPTI Canada Inc. is a Calgary, Alberta-based company focused on
developing the fourth and next major integrated oil sands project in Canada,
the Long Lake Project, in a 50/50 joint venture with Nexen Inc. The first
phase of the Project consists of 72,000 barrels per day of SAGD (steam
assisted gravity drainage) oil production integrated with an OPTI-operated
upgrading facility, using OPTI's proprietary OrCrude(TM) process and
commercially available hydrocracking and gasification. Through gasification,
this configuration substantially reduces the exposure to and the need to
purchase natural gas. The Project is expected to produce 58,500 bbl/d of
products, primarily 39 degree API Premium Sweet Crude with low sulphur
content, making it a highly desirable refinery feedstock. OPTI's common shares
trade on the Toronto Stock Exchange under the symbol OPC.
FORWARD LOOKING STATEMENTS
Certain statements contained herein are forward-looking statements,
including statements relating to: OPTI's operations; anticipated financial
performance; business prospects, expansion plans and strategies; OPTI's plans
and expectations concerning the use and performance of the OrCrude(TM) process
and other related technologies; the cost, development and operation of the
Long Lake Project and OPTI's relationship with Nexen Inc. Forward-looking
information typically contains statements with words such as "anticipate,"
"estimate," "expect," "potential," "could" or similar words suggesting future
outcomes. Readers are cautioned not to place undue reliance on forward-looking
information because it is possible that expectations, predictions, forecasts,
projections and other forms of forward-looking information will not be
achieved by OPTI. By its nature, forward-looking information involves numerous
assumptions, inherent risks and uncertainties. A change in any one of these
factors could cause actual events or results to differ materially from those
projected in the forward-looking information. Although OPTI believes that the
expectations reflected in such forward-looking statements are reasonable, OPTI
can give no assurance that such expectations will prove to be correct.
Forward-looking statements are based on current expectations, estimates and
projections that involve a number of risks and uncertainties which could cause
actual results to differ materially from those anticipated by OPTI and
described in the forward-looking statements or information. The
forward-looking statements are based on a number of assumptions which may
prove to be incorrect. In addition to other assumptions identified herein, we
have made assumptions regarding, among other things: market costs and other
variables affecting operating costs of the Project; the ability of the Long
Lake joint venture partners to obtain equipment, services and supplies,
including labour, in a timely and cost-effective manner; the availability and
costs of financing; oil prices and market price for the PSC(TM) output of the
OrCrude(TM) Upgrader; foreign currency exchange rates and hedging risks;
government regulations and royalty regimes; the degree of risk that
governmental approvals may be delayed or withheld; other risks and
uncertainties described elsewhere in this document or in OPTI's other filings
with Canadian securities authorities.
Readers should be aware that the list of factors, risks and uncertainties
set forth above are not exhaustive. Readers should refer to OPTI's current
Annual Information Form, which is available at www.sedar.com, for a detailed
discussion of these factors, risks and uncertainties. The forward-looking
statements or information contained in this news release are made as of the
date hereof and OPTI undertakes no obligation to update publicly or revise any
forward-looking statements or information, whether as a result of new
information, future events or otherwise, unless so required by applicable laws
or regulatory policies.
For further information:
For further information: Alison Trollope, Investor Relations Manager,