Total slows Alberta oil sands plans

Gary Park

For Petroleum News

French energy giant Total has joined a procession to the sidelines in the Alberta oil sands by asking to withdraw regulatory applications for its C$11 billion, 100,000 barrels per day Joslyn North Mine.

In a letter to the Alberta Energy Regulator, Hugh Campbell, vice president of Total’s Canadian unit, said the company is dropping a request to amend a project approval issued in 2011.

That comes almost a year after the company said that rather than making a final investment decision it was slowing the regulatory process while it explored ways to reduce costs.

Now, the company told the Alberta Energy Regulator that “in the light of current significant changes to global energy market conditions” it has been forced to make “another difficult decision” by withdrawing its regulatory application.

But a company spokesman said that although Joslyn is no longer a near-term priority, the Joslyn North assets will not be offered for sale.

He said the oil sands remain part of Total’s global long-term strategy and timing will be reviewed “as economic conditions change.”

Joslyn’s majority partners are Total 38.25 percent and Suncor Energy 36.75 percent, with Occidental Petroleum and Inpex also holding stakes.

Total and Suncor are also partners in the C$13.5 billion Fort Hills oil sands project that received a final go-ahead in 2013 and is expected to start producing 180,000 bpd in 2017.

As well, Total and operator ConocoPhillips Canada own the Surmont thermal recovery project that is operating one phase, has a second under construction and a third before regulators. If all phases are built output is expected to be 260,900 bpd.

Total’s move came two days after Shell Canada shelved its application for the Pierre River oil sands mine, while Norway’s Statoil had earlier put on hold for at least three years work on its thermal recovery Corner project.

In a surprise move March 11, a contractor laid off 1,000 workers at Husky Energy’s C$3.2 billion Sunrise oil sands operation about six months ahead of schedule just as the first phase of 60,000 bpd was brought into production.

The project is a 50-50 joint venture with BP, which will process the crude bitumen at its Toledo, Ohio, refinery.

The workers were all members of the Christian Labor Association of Canada, which said it had no idea why the jobs were terminated so suddenly by Saipem’s Canadian unit.

Husky said any remaining work at the site will be handled by the company and other contractors.

The company, in recently announcing cuts to its 2015 capital budget, said it was seeking up to C$600 million in corporate cost reductions by its suppliers and contractors.