Canadian Oil Sands Trust

Canadian Oil Sands Trust

February 24, 2010 08:00 ET

Canadian Oil Sands Provides Update of Syncrude Expansion Plans

CALGARY, ALBERTA--(Marketwire - Feb. 24, 2010) - Canadian Oil Sands Trust (TSX:COS.UN) (the "Trust" or "Canadian Oil Sands" or "we") today provided an update to the growth plans for our Syncrude project. Based on preliminary scoping and design work being done by Syncrude and ExxonMobil, Syncrude's view now is that their existing Mildred Lake upgrading facility has latent capacity that can be unlocked through a series of debottleneck projects. This should allow synthetic crude oil production to grow to approximately 425,000 barrels per day by the end of this decade. These debottleneck projects involve accessing the excess coking capacity that was constructed during Syncrude's last expansion, making modifications to other facilities, and potentially adding new ancillary units.

The expanded upgrader capacity would be supplied by bitumen from the undeveloped Aurora South mine. In December 2009, Syncrude submitted an update report to the regulators further to the conditions for approval received for Aurora South in 1998. Syncrude plans to begin constructing a mining train on Aurora South around 2012 with production expected by the end of 2016. Construction on a second mining train is planned to begin around 2014 with production commencing towards the end of the decade. Each mine train is designed for capacity of about 100,000 barrels of bitumen per day, resulting in total bitumen productive capacity of 600,000 barrels per day by 2020 at Syncrude. This volume exceeds the upgrader's processing capacity, resulting in roughly 115,000 barrels of excess bitumen supply. Syncrude is considering incorporating new technology in the construction of the Aurora South mine trains aimed at improving bitumen recovery levels, energy efficiency and product quality. The improvement in product quality would also allow for pipeline transportation and sales of surplus bitumen volumes.

These growth plans would result in Syncrude broadening its production from the current light, sweet synthetic blend to a slate including heavy and sour blends. Decisions regarding further upgrading capacity will be considered in the future in the context of evolving heavy/light crude oil price spreads.

"Under today's economic conditions, we believe these expansion plans have the advantage of bringing on production growth with less project execution risk and better economics than constructing greenfield upgrading facilities," said Marcel Coutu, Canadian Oil Sands' President and Chief Executive Officer. "I believe that, given the size of Syncrude's resource base, we still have the ability to grow beyond this expanded 600,000 barrel per day productive capacity level."

Cost estimates for these expansion plans are not yet available. The plans are subject to regulatory approval. As well, approvals from Syncrude's joint venture owners and Canadian Oil Sands' Board of Directors are required to move from scoping to detailed engineering work and then construction. ExxonMobil, majority owner of Imperial Oil, is providing the project management expertise under the Management Services Agreement between Syncrude Canada Ltd. and Imperial Oil.

Located near Fort McMurray, Alberta, Syncrude operates large oil-sands mines and an upgrading facility that produces a light, sweet crude oil on behalf of its joint venture owners, which include Canadian Oil Sands Limited, ConocoPhillips Oilsands Partnership II, Imperial Oil Resources, Mocal Energy Limited, Murphy Oil Company Ltd., Nexen Oil Sands Partnership, and Petro-Canada Oil and Gas (Suncor). Canadian Oil Sands provides a pure investment opportunity in the Syncrude project through its 36.74 per cent working interest. The Trust is managed by Canadian Oil Sands Limited and has approximately 484.4 million units outstanding, trading on the Toronto Stock Exchange under the symbol COS.UN.

Advisory: in the interest of providing Canadian Oil Sands Trust ("Canadian Oil Sands" or the "Trust") unitholders and potential investors with information regarding the Trust, including management's assessment of the Trust's future plans and operations, certain statements throughout this release contain "forward-looking statements" under applicable securities law. Forward-looking statements in this release include, but are not limited to, statements with respect to: the expectation to grow production to 600,000 barrels per day of bitumen and 425,000 barrels per day of synthetic crude oil; the timing of such expansions and the ultimate scope of expansions; the specifics of the first mine train for Aurora South starting and ending construction; expansion plans regarding bitumen capacity and upgrader debottlenecking; that new technology in the construction of the Aurora South mine trains will improve bitumen recovery levels, energy efficiency and product quality; the ability to produce different slates of products in the future and the belief that Syncrude can add production more easily and cheaper than a greenfield expansion. You are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur.
Although the Trust believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Some of the risks and other factors which could cause results to differ materially from those expressed in the forward-looking statements contained in this release include, but are not limited to: general operational issues relating to a complex, integrated mining and upgrading facility; operating constraints due to weather, especially as it relates to bitumen production; the regulatory changes that impact oil and gas operations; the requirements relating to Syncrude owner approvals for certain capital expansions; general economic, business and market conditions; commodity prices; and such other risks and uncertainties described from time to time in the reports and filings made with securities regulatory authorities by the Trust. You are cautioned that the foregoing list of important factors is not exhaustive. Furthermore, the forward-looking statements contained in this release are made as of the date of this release, and the Trust does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this release are expressly qualified by this cautionary statement.

Canadian Oil Sands Limited

Marcel Coutu, President & Chief Executive Officer

Units Listed - Symbol: COS.UN

Toronto Stock Exchange

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