Another oilsands project bites the dust


mentalfloss
#1
$11 Billion!! That's like 11 gas plant scandals.

Total shelves $11-billion Alberta oil sands mine

Total SA, the French energy powerhouse, and its partners have shelved plans to develop a major oil sands mining project.

André Goffart, the head of Total’s Canadian division, said rising costs made the project unviable. It will continue with so-called cost optimization efforts, although Mr. Goffart did not say how long the project will be delayed.

“Joslyn is facing the same challenge most of the industry world-wide [is], in the sense that costs are continuing to inflate when the oil price and specifically the netbacks for the oil sands are remaining stable at best – squeezing the margins,” he told reporters in a conference call.

“We are still in the cycle within this industry where cost inflation in general is going much faster than price adjustments. We know that there is a rebalancing that needs to be done.”

Major energy players have addressed a variety of industry challenges in recent years by becoming more selective with spending, developing projects in smaller chunks or postponing work in a bid to improve financial returns. Rising costs for labour and materials have long worked against the economics of new projects, and limited pipeline access to ship oil has weighed on prices for Alberta oil. Total is signed up to ship oil on three major undeveloped pipeline projects facing uncertainty: Keystone XL, Northern Gateway and the Trans Mountain expansion.

Mr. Goffart stressed that the Joslyn decision is due to the project’s costs, saying its technology and execution plans must improve. Total and its partners will continue to focus “cost optimization” for Joslyn; layoffs are in the works for the French company’s employees in Calgary.

Joslyn has faced troubles before. Part of the development was originally designed to use wells rather than trucks and shovels in order to extract bitumen. That idea was abandoned when an overpressurized well blew up, creating a crater.

“I thought they would have stopped the project then,” said Laura Lau, a senior vice-president and portfolio manager at Toronto’s Brompton Funds. “But no. More good money after bad. Good money after bad.”

Total controls 38.25 per cent of the Joslyn mine, Suncor Energy Inc. holds 36.75 per cent, Occidental Petroleum Corp. owns 15 per cent and Japan’s Inpex Corp. holds the remaining 10 per cent.

Suncor, which did not join the Joslyn effort until 2010, said the project could be revived. “Joslyn is a quality resource with the potential to mine given the right design and execution strategy,” spokeswoman Sneh Seetal said in an e-mail.

Steve Williams, Suncor’s chief executive officer, in August said the company will not make a decision on whether to proceed with the Joslyn mine until at least 2017.

Suncor and Total have teamed up on another mine, Fort Hills. That undeveloped project is widely regarded as more attractive than Joslyn. Mr. Williams, along with oil sands experts, did not believe it made sense to develop both Fort Hills and Joslyn at the same time. Suncor and Total in 2013 officially killed plans to proceed with their $11.6-billion Voyageur upgrader project because of rising costs, hoping it would be more profitable to ship unprocessed bitumen.

Other oil sands developments are going ahead. Canadian Natural Resources Ltd. recently said it plans to spend an additional $400-million on its Horizon oil sands expansion project this year. Steve Laut, CNRL’s president, in early May said costs are favourable. Horizon, which went wildly over budget when it was first built, has an advantage over Joslyn now because it is expanding, rather than starting from scratch.

Total’s Mr. Goffart would not say how much money has been spent on the Joslyn joint venture. Roughly 150 jobs in Total’s Canadian division will be affected by the decision, he said, but the company will try to find places elsewhere in the company for some of those employees.

Total’s ability to access capital was not a factor in the decision, Mr. Goffart said. “We know that mining projects are particularly challenging. New mining projects are all major projects and they are very capital intensive.“

Total shelves $11-billion Alberta oil sands mine - The Globe and Mail
 
darkbeaver
Republican
#2
I read an article the other day that said gasoline sales had dropped seventy five percent in the domestic US market since 1998.
 
Walter
#3
Why are you comparing a business decision in AB to a vote buying scheme in ON?
 
damngrumpy
No Party Affiliation
#4
It is the whining of the oil companies that gets me. They are like bankers
they suck the life out of everything and cry there is no profit in it for them.
They get all kinds of breaks they get to fix, err set the prices and still they
are not satisified
 
darkbeaver
Republican
#5
They are bankers.

Governments are bankers.
Popes are bankers.
 
mentalfloss
#6
Quote: Originally Posted by WalterView Post

Why are you comparing a business decision in AB to a vote buying scheme in ON?

Why are you such a Prickly Curmudgeon?
 
Cliffy
Free Thinker
#7
Quote: Originally Posted by mentalflossView Post

Why are you such a Prickly Curmudgeon?

You would be too if your balls hung outside your shirt from your neck. Just look at those prickly little balls!
 
bill barilko
#8
Quote: Originally Posted by damngrumpyView Post

It is the whining of the oil companies that gets me. They are like bankers
they suck the life out of everything and cry there is no profit in it for them.
They get all kinds of breaks they get to fix, err set the prices and still they
are not satisified

Yes it must be hell to have money as your god.
 
MHz
#9
How about they come up with some uses for the sand instead of looking for different ways to leave just the sand behind? (in that better grades of product are already available elsewhere for cheaper. This can remain be a rainy day supply.

Quote: Originally Posted by bill barilkoView Post

Yes it must be hell to have money as your god.

That is only when you have so much you would miss it if you lost it all. Wanting enough to last until the next payday is not revering money as a god.
 

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