Shell cancelled billions project Canadian tar sands oil
The proposed construction of the production plant has been canceled.
Shell’s decision will cost $ 2 billion in costs and compensation, as did the oil company announced last Wednesday during the presentation of its third quarter results this year. Last May, the Canadian project was already suspended to look for cost reductions or to renegotiate contracts.
But … according to Shell: “Although the tar sand projects has been stopped, they will be reconsidered when oil prices will rise or the cost of transporting tar sands oil in the oil district of Alberta will go down. The latter would require a new pipeline to the United States, which is not being built.
The cessation of the Canadian plan is one of the fifteen projects that have been stopped or sold by Shell since 2014. In many cases, the low price of oil plays an important role, as in the abandoned Al Karaana refinery project in Qatar and the deletion of the proposed offshore oil drilling in the Arctic in Alaska.
Earlier this year, Shell deleted the Pierre River oil sands mine in Canada. That project was still in its early stages, but had to produce 200 thousand barrels per day. Other oil companies have postponed investments in tar sands oil in anticipation of a time when oil on the world market will generate more than $ 65 instead of $ 45 now.
The price of the lower quality tar sands oil has always been lower and fluctuated around 23 dollars a barrel in August this year. That low rate is partly due to the lack of pipelines in Alberta that make transportation expensive. In the period January – July 2015, all sixteen Canadian oil sands projects have been suspended or delayed.
The end of 2013, Shell announced it would sell in three years to 15 billion in assets or investments and would focus mainly on activities that yield more profits. Last year, the sales counted already at 11.6 billion dollars.
In 2013, financial director Simon Henry told the shareholders: “On-going investments in oil extraction will not be skimped. He called it “destruction of capital ‘to shut down existing projects. “We do not invest based on current prices, but based on expectations for the future.”
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