Shell in $300m oil sands sale

Shell has finally offloaded an oil sands project in Canada after a local player came in with a deal for almost $300 million.

Privately-held Osum Oil Sands has snapped up the Orion oil sands project in north-eastern Alberta province for C$325 million (US$299 million).

Calgary-based Osum revealed the purchase on Tuesday, with the sale from the Anglo-Dutch supermajor seller expected to close around 31 July.

"The decision to divest Orion is part of our ongoing efforts to manage our portfolio that allows us to focus on our core in situ assets in the Peace River area," a Shell spokeswoman said but declined to comment on financial details.

It is two years since Shell put the Orion steam-driven project on the block, six years after acquiring it as part of a C$2.4 billion acquisition of Blackrock Ventures. In 2010, Shell took a $1 billion writedown on the assets, which also included holdings in a region called Seal.

Orion is a steam-assisted gravity drainage project, in which the company injects steam into the earth, loosening up the bitumen so it can be pumped to the surface.

Production comes from 22 well pairs on an eight-section lease located 30 kilometres north-west of Cold Lake, Alberta.

Gendis, an investor in Osum, said the project average 6700 barrels per day in the first quarter, and that it has an estimated economic life in excess of 25 years left. Osum will own the project 100%.

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