One of the companies in the Koch brothers’ sprawling fossil business empire announced last week that it is stepping away from a 10,000-barrel-per-day project in the Alberta tar sands/oil sands for which it received regulatory approval in June 2014.
The announcement coincided with Statoil’s decision to accept a $500-million write-off as it sold its tar sands/oil sands holdings to Athabasca Oil Corporation.
When they aren’t busy funding climate denial and the U.S. Tea Party movement, the Wichita, Kansas-based Koch brothers are among the biggest investors in tar sands/oil sands, according to an exposé published last year by the National Observer.
“You can say a lot of things about the Koch brothers, you can have a lot of criticisms—but what you cannot say is that they’re stupid businesspeople,” NextGen Climate campaign manager Mike Casey said at the time. “They’re very smart, they play for the long term,” and “that’s why they’re invested in tar sands to such a huge extent.”
But now, at least as far as the Muskwa Steam Assisted Gravity Drainage (SAGD) plant is concerned, those calculations appear to have changed.
“Koch Oil Sands Operating ULC does not believe the current nor medium-term economic environment in Alberta will provide opportunity to generate an adequate return on the required capital for construction of the Muskwa SAGD project,” Vice-President Byron Lutes wrote in a submission to the Alberta Energy Regulator (AER).
“The longer-term risk of the project is further burdened with regulatory uncertainty around the Climate Leadership Program and its potential impacts on the project, from carbon tax to the emissions cap, both recently legislated by the Alberta government,” Lutes added.
JWN Energy cites no specific reference to an oil price crash that has now been going on for more than two years, prompting fossils to celebrate even a relatively small recovery to about US$50 per barrel and deeply undermining the cost-competitiveness of new tar sands/oil sands projects.
JWN notes that Koch walked away from another, 60,000-barrel-per-day SAGD project earlier this year, but also filed an application this week for a new plant that would produce 12,000 barrels per day.