Shell slows oil sands project

Royal Dutch Shell has put itself on the wait-and-see list in Alberta’s oil sands by delaying first production from its 80,000 barrels per day Carmon Creek in-situ project in the northwest Peace River region by at least two years until 2019.

The C$3 billion venture got the corporate go-ahead in October 2013, but has fallen victim to Shell’s capital spending pullback to US$33 billion this year from US$35 billion.

Chief Financial Officer Simon Henry said on Shell’s website that the company is dealing with a “dynamic picture” that involves a “series of pragmatic decisions on new opportunities.”

As a result, spending on resource plays has been cut by 20 percent, while Carmon Creek is being re-staged, although the company said the project remains on its priority list.

A spokesman said there is still time to make adjustments to the project schedule “to ensure the long-term competitiveness of a project that will ultimately have a lifespan of more than 30 years.”

Although low crude prices are not the reason for ordering a delay, the market downturn does give Shell time to identify cost reductions on Carmon Creek, he said.

The project is designed to include a 630-megawatt cogeneration power plant, of which 500 megawatts are to be sold into the Alberta power grid.

Shell has also pulled the plug on an application for its Pierre River oil sands mine, but Canadian President Lorraine Mitchelmore said the mine remains a “long-term opportunity.”

- Gary Park