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Shell Scraps Oil Sands Project in Canada

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Published on : Oct 29, 2015

Shell, the Anglo-Dutch oil giant has announced that it was wrapping its proposed oil sands project, Carmon Creek, in Alberta, Canada. The project was projected to produce 80,000 barrels of oil sands per day and was originally conceived in 2013.

However as the global oil market slumped at an unprecedented rate over this year due to oversupply and price reduction, market situation also seems to have been turned against Shell. The company had announced in March that it will alter the project’s design to benefit of the market’s sluggish growth to optimize the design and to retender some of its contracts. The logic behind the move was that the low oil prices on a global front were forcing reduction of costs across the entire supply chain and it would have potentially allowed the company to reduce construction costs. Still, a rebound was needed for making the project viable, which never came.

The company has now said in a statement that after reviewing the potential design options for the project, the capital priorities of the company, and updated costs, the company came to a conclusion that the project does not rank in the company’s portfolio right now.

Shell has also given a very detailed justification about why the project was being cancelled. The company said that the decision to wrap the project is a reflection of the uncertainties in current times, which also includes the lack of infrastructure for moving Canada’s crude oil to the global market.

With this statement, Shell is suggesting that the project that would have significantly added to the oil production capacity of Canada is also scraped because the country does not have enough oil pipelines. For many years, environmentalists have protested the construction of the Keystone XL pipeline citing that blocking such an infrastructure will force oil companies to keep their reserves in the ground and would help stop the emission of greenhouse gases from rising further

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