Shell Shelves Oilsands Mine Project

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CBJ – The drastic decline in the Canadian dollar since last summer has forced Royal Dutch Shell to abandon its plans for an oil sands mine north of Fort McMurray, Alberta.

The project was expected to produce 200,000 barrels-a-day at the Pierre River mine. The company still sees merit in revisiting the opportunity, but right now it’s definitely not a top priority.

“Our current focus is on making our heavy-oil business as economically and environmentally competitive as possible,” Shell Canada President Lorraine Mitchelmore said in a statement. “We will continue to hold leases and can reapply in the future when the time is right.”

Canada has seen its oil revenues plunge in recent months and no more so than in Alberta, where the energy sector is on life support after oil prices fell more than 50% since last summer.

The collapse in crude prices has prompted layoffs and deep spending cuts across the industry. Even major companies such as Suncor Energy and Cenovus Energy have felt the impact and have been forced to cut back in a variety of areas.

About 300 jobs were lost last month at Shell’s Albian Sands bitumen project.

Canadian companies are expected to cut as much as $23-billion from corporate budgets this year, with oilsands spending falling by about a quarter to $25-billion. That’s down from $33-billion in oil sands spending last year, according to the Canadian Association of Petroleum Producers.

@CanBizJournal

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