Shell Withdraws From Largest Tar Sands Project Yet
by Ari Phillips Posted on February 25, 2015
"Shell Withdraws From Largest Tar Sands Project Yet"
Keystone XL is not the only deciding factor in the future of tar sands extraction.
The outsized debate over the Keystone XL pipeline, which entered a new era yesterday after Obama wielded his veto pen against legislation approving its construction, is not the only element in the debate over whether the greenhouse gas-intensive tar sands get developed. Oil supply, demand, and cost are pulling some major levers too: with oil prices at rock-bottom lows, on Monday Royal Dutch Shell announced it was shelving plans to build a new tar sands mine in northern Alberta — the largest such project to be deferred.
Shell withdrew its applications for the Pierre River project, which would have produced 200,000 barrels-per-day (bpd), to focus on maintaining profitability for its existing 255,000-bpd tar sands operations, according to the company.
“The Pierre River Mine (PRM) remains a very long term opportunity for us but it’s not currently a priority,” said Lorraine Mitchelmore, Shell Canada President and Executive Vice President of Heavy Oil. “Our current focus is on making our heavy oil business as economically and environmentally competitive as possible.
Shell was one of the earliest tar sands producers to cut staff due to low oil prices, laying off around 300 workers at its Albian tar sands project in Alberta starting last month.
Instability makes it hard for most companies to do business, and unreliable oil prices are no different. Crude oil prices have fallen more than 50 percent over the last six months, hovering between $50 and $60 per barrel of late. Last August, Mitchelmore said Shell Canada’s tar sands business met profitability markers when crude traded above $70 per barrel.
Shell originally halted work on the Pierre River project a year ago, stating the need to re-evaluate the timing as a heated environmental review process was taking longer than anticipated. The project was first proposed in 2007.
Tar sands are extremely GHG intensive, and the shelving of the Pierre River project along with two other tar sands endeavors — Total’s Joslyn North and Statoil’s Corner Project — has helped avoid the emissions of 2.8 billion metric tons of carbon dioxide, which is equivalent to stopping the construction of 18 new coal plants with a lifespan of four decades. Tar sands oil produces as much as three times the greenhouse gas emissions of conventionally produced oil. The government of Alberta, where the mines are sited, expects to lose $5.5 billion in revenue this year because of low oil prices.
http://thinkprogress.org/climate/2015/02/25/3626863/shell-shelves-tar-sa...
