Nexen Provides Long Lake Project Update

Market Wire, October, 2008

Nexen Inc. provides the following update with respect to its Long Lake oilsands project.

Final pre-operational testing of the upgrader is ongoing. The two gasifier trains necessary for start-up have been test-fired with vacuum residue feed in September and testing continues. Once all testing is completed in the gasification unit, we will be ready to begin the coordinated and integrated start-up of all the upgrader units. The air separation unit is operational, supplying combustion air, liquid oxygen and nitrogen to support gasifier test firing. In the OrCrude(TM) unit, the distillation units are operating, supplying vacuum residue for gasifier testing with the remainder of the unit ready for start-up. First production of Premium Sweet Crude (PSC(TM)) is now expected in October.

A number of issues with respect to water treatment and steam generation previously described have been resolved, resulting in a significant ramp-up in steam production. The reliability of our steam-assisted gravity drainage (SAGD) facilities is improving and gross bitumen production during the first half of September averaged 13,200 bbls/d compared to an average of 11,600 bbls/d in August. Bitumen production volumes for the second half of the month were impacted by a three-day plant power outage as well as required repairs to a field emulsion pipeline. When we combine our current SAGD production levels with externally sourced bitumen, we expect to have sufficient volumes to start-up the upgrader. We expect to reach full design rates of 72,000 bbls/d of bitumen production, upgraded to approximately 60,000 bbls/d of PSC(TM) in early 2010.

The Long Lake project is being jointly developed by Nexen Inc. and OPTI Canada Inc.

Nexen Inc. is an independent, Canadian-based global energy company, listed on the Toronto and New York stock exchanges under the symbol NXY. We are uniquely positioned for growth in the North Sea, Western Canada (including the Athabasca oil sands of Alberta and unconventional gas resource plays such as coalbed methane and shale gas), deep-water Gulf of Mexico, offshore West Africa and the Middle East. We add value for shareholders through successful full-cycle oil and gas exploration and development and leadership in ethics, integrity, governance and environmental protection.

Forward-Looking Statements

Certain statements in this report constitute "forward-looking statements" (within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended) or "forward-looking information" (within the meaning of applicable Canadian securities legislation). Such statements or information ("forward-looking statements") are generally identifiable by the terminology used such as "anticipate", "believe", "intend", "plan", "expect", "estimate", "budget", "outlook" or other similar words and include statements relating to or associated with individual wells, regions or projects. Any statements as to possible future crude oil, natural gas or chemicals prices, future production levels, future cost recovery oil revenues from our Yemen operations, future capital expenditures and their allocation to exploration and development activities, future earnings, future asset dispositions, future sources of funding for our capital program, future debt levels, possible commerciality, development plans or capacity expansions, future ability to execute dispositions of assets or businesses, future cash flows and their uses, future drilling of new wells, ultimate recoverability of reserves or resources, expected finding and development costs, expected operating costs, future demand for chemicals products, estimates on a per share basis, sales, future expenditures and future allowances relating to environmental matters and dates by which certain areas will be developed or will come on stream, and changes in any of the foregoing are forward-looking statements. Statements relating to "reserves" or "resources" are forward-looking statements, as they involve the implied assessment, based on estimates and assumptions that the reserves and resources described exist in the quantities predicted or estimated, and can be profitably produced in the future.

The forward-looking statements are subject to known and unknown risks and uncertainties and other factors which may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such statements. Such factors include, among others: market prices for oil and gas and chemicals products; our ability to explore, develop, produce and transport crude oil and natural gas to markets; the results of exploration and development drilling and related activities; volatility in energy trading markets; foreign-currency exchange rates; economic conditions in the countries and regions in which we carry on business; governmental actions including changes to taxes or royalties, changes in environmental and other laws and regulations; renegotiations of contracts; results of litigation, arbitration or regulatory proceedings; and political uncertainty, including actions by terrorists, insurgent or other groups, or other armed conflict, including conflict between states. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these factors are interdependent, and management's future course of action would depend on our assessment of all information at that time.