Shell Canada, Western Oil Sands to Expand Oil sands

Western Oil Sands Inc. said on Wednesday it has formally agreed to participate in Shell Canada Ltd.'s planned expansion of its Athabasca oil sands project at an expected cost to the company of C$2.2 billion.

Calgary-based Western Oil Sands' main asset is its 20 percent stake in the project, which is slated for a 100,000 barrel a day expansion.

The project includes the expansion of an oil sands mine north of Fort McMurray, Alberta, and an upgrading refinery near the provincial capital of Edmonton. If the project goes ahead, output will be more than 255,000 barrels of synthetic crude a day.

Western is the first of the partners to give a formal go-ahead to the project. Shell Canada, which has a 60 percent stake, said on Wednesday it will make a formal decision on whether to proceed by year-end.

That decision isn't expected to be affected by Royal Dutch Shell Plc's C$7.7 billion bid to acquire the 22 percent of the company it doesn't already own.