Tar sands site had been slated to produce 80,000 barrels a day but lower global prices, cost-cutting and lack of infrastructure contribute to shelving

This article is more than 4 years old

This article is more than 4 years old

Royal Dutch Shell will halt construction of its Carmon Creek thermal oil sands venture in Canada due to “uncertainties” facing the project, including a lack of infrastructure.



The decision to stop the project in the western province of Alberta comes as Shell cuts costs and a shortage of pipeline capacity constrains growth in the Canada’s oil sands industry.

Shell chief executive officer Ben van Beurden said: “We are making changes to Shell’s portfolio mix by reviewing our longer-term upstream options worldwide, and managing affordability and exposure in the current world of lower oil prices.

“This is forcing tough choices at Shell.”

Oil giants such as Shell and its rival BP have been slashing investment and jobs after a slide in crude prices, which are trading at less than half of their 2014 highs due to a global supply glut.

Shell’s cancellation of the 80,000 barrel per day Carmon Creek project comes after the Anglo-Dutch oil company halted its search for oil off the Alaskan coast in September at a cost of several billion dollars.

The decision also comes as Washington wrangles with whether to approve the Keystone XL oil pipeline to transport crude from Alberta to the Gulf of Mexico. The project has been delayed over environmental concerns.

Carmon Creek is wholly owned by Shell, which said it expected the decision to cost $2bn in its third-quarter results due to impairment, contract provision, redundancy and restructuring charges.

Shell – which gave the project its go-ahead in 2013 but announced it would be postponed in March this year – said it would retain some equipment at Carmon Creek and “study the options for this asset”.