A Calgary company is abandoning a $60-million tar sands/oil sands development in Utah that was 85% complete, blaming low oil prices and the decision by two of its key contractors to shut down their operations in the state.
The announcement was just one of several recent project decisions that point toward a possible slowdown in fossil fuel development in North America.
- Be among the first to read The Energy Mix Weekender
- A brand new weekly digest containing exclusive and essential climate stories from around the world.
- The Weekender:The climate news you need.
“The oil industry is facing one of the most challenging environments it’s ever seen and it is prudent for us to adjust our construction plan accordingly,” said US Oil Sands Inc. CEO Cameron Todd. “Low oil prices accentuate the need for a new approach in our industry.”
The project “needs additional capital for commissioning, start-up, and operations to validate its unique extraction technology,” the Herald reported last week. US Oil Sands “plans to employ a biodegradable solvent made from citrus fruit, thus avoiding the use of tailings ponds, at the 2,000-barrel-per-day project.”
In Alberta in mid-January, meanwhile, China’s CNOOC Ltd. suspended operations at the 50,000-barrel-per-day Long Lake tar sands/oil sands plant operated by its subsidiary, Nexen Energy ULC, after a fatal explosion at the facility. Long Lake was previously the site of a five-million-litre pipeline spill in July, North America’s largest-ever, that “left 16,000 square metres of muskeg slathered in bitumen, sand, and produced water,” CTV News reported at the time.
By shutting down Long Lake, Nexen became “a rare example of an oil sands producer that has curtailed output amid the free fall in commodity prices,” the Globe and Mail reports. “With oil prices roughly 70% lower than in mid-2014, many oil sands producers are wrestling with a similar predicament.”
The picture is hardly any brighter for liquefied natural gas (LNG) producers in British Columbia, where the provincial government’s dream of an export-driven economic boom has been hobbled by First Nations opposition at home and glutted markets overseas. In response to “weak prices and regulatory uncertainty,” the Globe and Mail reported, “Royal Dutch Shell PLC disclosed on Thursday that the LNG Canada joint venture in northern B.C. is being delayed by about nine months, saying the partners are now aiming to make a final investment decision at the end of 2016 instead of the first quarter.”
The overall condition of the oil and gas industry “is casting doubt on all 20 proposals to export LNG from British Columbia,” wrote reporters Brent Jang and Shawn McCarthy.
The Shell decision is “a blow to Premier Christy Clark’s ambitious LNG dream that has left her planning for the next election without LNG revenue,” the Vancouver Sun notes. “Clark had campaigned in 2013 on a promise of a ‘debt-free B.C.,’ with a $100-billion LNG prosperity fund from an industry expected to generate 100,000 jobs. Three years later, no companies have started construction, leaving Clark’s initial timeline of a small LNG export facility by 2016 and three more by 2020 unlikely to be met.”