Sunshine Oilsands and China Petroleum Engineering & Construction (CPECC) have signed a memorandum of understanding (MoU) to expand the West Ells Phase II project located within the Athabasca oil sands region, Canada.
The West Ells Phase I is currently in production stage with positive reservoir performance, and holds the capacity to produce 5,000 barrels per day.
The West Ells Phase II is an expansion of the Phase I project, with the capacity to produce an additional 5,000 barrels daily.
The company noted that eight wells have already been drilled for the project.
Under the agreement, the expansion works include reviewing and refining of some of the designs, completion of well work and the construction of surface facility.
The Phase II development will require nearly $50m, which will share most of the Phase I surface facilities.
After the completion of Phase II, the total production capacity of West Ells will be 10,000 barrels per day.
The company estimates that following the expansion of Phase II, the average production costs per barrel will decrease significantly as the fixed costs associated with this site will be shared among the two projects.
CPECC and Sunshine Oilsands have decided to explore this expansion project further.
CPECC intends to work as the contractor with the responsibility to carry out engineering, procurement, construction and maintenance work.
Sunshine Oilsands focuses on the development of oil sands leases situated in the Athabasca oil sands region of Alberta.
It owns interests in nearly one million acres of oil sands, petroleum and natural gas leases within the region.