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Fort Hills Advances BITMIN Oilsands Extraction Testing

[Daily News] UTS Energy Corporation has announced SNC-Lavalin Inc. has been awarded a contract for the engineering, procurement and construction of an experimental plant to demonstrate the BITMIN extraction process.
The company also announced an amended development application for the Fort Hills Project has been filed with the Alberta Energy and Utilities Board and Alberta Environment.

In the application, the Fort Hills Project is requesting an amendment to the approvals that were previously granted in December 2002. Submission of this application meets the first development milestone under the amended tenure agreement with the Alberta Department of Energy pertaining to oilsands Leases 7598060T05 and 7281020T52.

SNC-Lavalin Inc. has been awarded a contract for the engineering, procurement and construction of an experimental plant to demonstrate the BITMIN extraction process at a near commercial scale. The plant will produce approximately 3,500 barrels per day of bitumen froth from oilsands mined on the Fort Hills lease using the BITMIN process which was extensively piloted in the 1990's.

Fort Hills is considering utilizing the BITMIN process in its commercial operations. The estimated expenditure for the BITMIN demonstration is approximately $37.0 million and work will commence immediately with construction anticipated this summer subject to regulatory approval.

"These are two major steps forward for the Fort Hills project. Meeting this regulatory milestone is key to progress of the project," said William Roach, president and CEO of UTS. "Moreover we believe the BITMIN technology may present a significant step forward in the extraction of bitumen from oilsands, both environmentally and commercially."

Calgary-based UTS Energy is an oilsands company with its principal asset being its interest in the Fort Hills oilsands project. Fort Hills is located in Alberta's Athabasca oil sands region approximately 90 kilometres north of Fort McMurray, contiguous to the Syncrude North Aurora Mine and Shell's Muskeg River Mine.

The Fort Hills oilsands project area encompasses 46,000 acres and comprises Oil Sands Leases 5, 8 and 52. Fort Hills contains 4.7 billion barrels of bitumen in place, of which 2.8 billion barrels are recoverable under the existing mine plan. Supporting this resource estimate is a database comprising very high quality drilling and related analytical information derived from some 1,027 boreholes.

The company is proposing a phased development of the Project based on mining and extraction of the bitumen and upgrading of bitumen to synthetic crude oil. UTS believes the resource base will support a 190,000 bbls per calendar day project.

The process of revising and optimizing the plan of development for the Fort Hills Project will be influenced by the recently announced introduction of Petro-Canada as the operating partner and the possible introduction of further working interest partner(s) into the Fort Hills Project. The partners will consider a range of options before finalizing the development plan and proceeding with the necessary regulatory permits and approvals.

On March 1, UTS announced that it had entered into a partnering arrangement with Petro-Canada for the development of the Fort Hills Project, which is expected to close in the second quarter of 2005, and is subject to receipt of all required governmental and regulatory approvals. Under this arrangement, UTS retains a 40% interest in the project, while Petro-Canada will become the operator with a 60% interest. UTS retains 100% ownership of lease 14 (encompassing 7,070 acres) on the west side of the Athabasca River.

The arrangement with Petro-Canada provides for an initial joint $1.0 billion project funding commitment, funded $900 million by Petro-Canada and $100 million by UTS. After the first $1 billion of spending has been reached, further costs and expenses incurred will be funded by the partners on the basis of their ownership interests.

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