Shell Announces Athabasca Oil Sands Project Joint Venture

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Aug. 9, 1999

Shell Canada Ltd. today announced it has reached an agreement with Western Oil Sands Inc. and Chevron Canada Resources Ltd. to work together to develop the proposed Athabasca Oil Sands Project.

Subject to due diligence and the corporate approval of each of the partners, Western and Chevron will each acquire a 20 percent Joint Venture interest in the Athabasca Oil Sands Project. Shell will retain the remaining 60 percent.

Western, a Calgary-based company focused on mining and bitumen extraction in the Athabasca region, is led by Guy Turcotte, chairman and CEO, and Tim Winterer, former president of BHP World Minerals, as president and COO. Western's management and staff will be, for the most part, the same personnel who have been working with Shell to prepare the feasibility study over the past two years. TD Securities has been advising Western on this project.

Neil Camarta, vice president, Oil Sands, Shell Canada, said, "Shell, Western and Chevron make a great oil sands team. Shell brings the oil sands resource and refinery infrastructure to the project, Western brings the mining expertise and Chevron is an experienced player in the North American energy market. We are comfortable working with Western and Chevron. Their principles and values are in line with ours, especially their determination to carry out this project in a manner that is environmentally responsible and consistent with Shell's commitments to local communities. Together we will work towards a project decision later this year."

Guy Turcotte, chairman and CEO of Western said, "This is an exciting project for us. Especially since our share of this high quality asset will form the basis of a new and very significant oil sands company."

Jim Simpson, president of Chevron Canada, said, "This is a tremendous opportunity to broaden Chevron's energy business and build our asset base in western Canada. Securing access to high quality, synthetic crude oil products positions Chevron for long term growth in this increasingly important feedstock market."

Shell's proposed Athabasca Oil Sands Project consists of three separate but integrated components: the Muskeg River Mine, near Fort McMurray, the Scotford Upgrader, north of Edmonton, and the Corridor Pipeline connecting the two. Regulatory approvals are in place for the Muskeg River Mine and Scotford Upgrader. A decision on the Corridor Pipeline is expected in the third quarter of 1999.

The entire project is expected to cost approximately $3.8 billion (1998 dollars). The project would initially produce 150,000 barrels per day of bitumen from the Muskeg River Mine. The Scotford Upgrader will then process the bitumen into high quality synthetic crude products. Start-up is scheduled for 2002.

The feasibility study for the project will be completed in the coming months. Shell, Western and Chevron will then decide on a project go-ahead later in 1999. If approval is received, construction will begin immediately.

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