Greenwire: Citing high costs, Royal Dutch Shell PLC announced that it plans to hold off on expanding oil sands projects for at least five years.
Marvin Odum, the Americas head for the energy company, said the oil sands have become one of the most expensive places to build and extract oil, so Shell will wait on expanding the Athabasca Oil Sands Project and instead focus on getting more production from its existing infrastructure.
The company’s retreat comes after strong declarations in 2007 that it could eventually mine almost 800,000 barrels of bitumen a day. The oil sands were set to be a boom for Shell, which managed a per-barrel profit 66 percent higher than its other assets in the first year of production at AOSP. But the expansion plans have been more costly than originally thought, rising from $9.4 billion in 2006 to $14.3 billion this year, and predicted oil prices won’t cover that difference.
That has led Shell to focus more on a pipeline to Asia or offshore oil in Alaska, Brazil and the Gulf of Mexico. And simply increasing existing production in the oil sands could net Shell an extra 30,000 to 80,000 barrels daily above the current 255,000 barrels per day rate.
The oil sands have also been assailed with environmental complaints over high energy and water use and possible destruction to the land. Odum said Shell has a strong environmental record and that the greenhouse gas emissions in the oil sands were “not ridiculously high,” although he conceded the company could advertise that better (VanderKlippe/Ebner, Toronto Globe and Mail, April 28). – JP














