According to TSN:

It looks like Wade Redden won't be the only high priced former NHL defenceman in the American Hockey League this season.
 
The Edmonton Oilers sent Sheldon Souray to the AHL on Wednesday, but in a twist, the club didn't send him to their own affiliate team.

The club sent Souray to the Hershey Bears, which is the AHL affilate of the Washington Capitals on a loan, as opposed to Oklahoma City Barons which is the Oilers farm team.
 
Having assigned Souray to the AHL, the Oilers cannot trade or play Souray until he passes through re-entry waivers.  Any team could claim him, splitting the remaining two years of Souray's contract ($4.5 million per year) and cap hit ($5.4 million per) with Edmonton.

The 34-year-old is still awaiting a trade after things went sour between him and the organization.  Souray wasn't invited to training camp and has been working out on his own while the Oilers try to find somewhere else for him to play.

"The decision has been coming for some time," Oilers general manager Steve Tambellini said.  "I don't want to get back to this mode, but was an ask that had been there from the player for a long time, close to a year and a half.  He wanted to leave, and I understand that, and we've done our best to find something that works for now." 

"Obviously Sheldon wants to play in the National Hockey League and I'm sure he'll get back there." 

According to TSN Hockey Insider Bob McKenzie, the Oilers and Capitals have not discussed one word about Souray becoming a Capital.   They just supplied a soft landing place for Souray because Hershey is one of the bigger teams in AHL. McKenzie also states that Souray's arrival has more to do with Hershey's master plan than Washingtons.