Above Photo: A flag bears the logo of Royal Dutch Shell outside the head office in The Hague, Netherlands, on Monday, April 7, 2014. AP Photo/Peter Dejong.
CALGARY — Royal Dutch Shell is scrapping its Carmon Creek oil sands project in northwestern Alberta, citing a lack of pipelines to coastal waters as one reason for the decision.
The move comes after a review of the project’s design and costs and where it stacks up against other projects Shell has in its portfolio.
The European energy giant first announced it would build the 80,000-barrel-a-day, steam-driven operation near Peace River, Alta., in October 2013.
But last March, the company said it would slow down the project while attempting to lower costs and improve its design.
However, the company now says now the project doesn’t rank in its portfolio — and one reason is the lack of infrastructure to get Canadian crude to global markets.
Shell will take a $2-billion charge against its third-quarter results because of the decision.
“We are making changes to Shell’s portfolio mix by reviewing our longer-term upstream options world-wide, and managing affordability and exposure in the current world of lower oil prices. This is forcing tough choices at Shell,” CEO Ben van Beurden said in a release.
U.S. benchmark crude is at around $43 a barrel — a far cry from the more than US$107 a barrel highs it hit in the middle of 2014.
Pipelines that would get Canadian oil players a better price for their product — like Enbridge’s (TSX:ENB) Northern Gateway pipeline to the West Coast and TransCanada’s (TSX:TRP) Energy East pipeline to the East Coast — face an uncertain future amid First Nations opposition and regulatory delays.
“Public opposition to new tar sands pipelines is keeping the carbon in the ground, giving us time to develop the alternatives,” said Keith Stewart of Greenpeace Canada.
“We hope our new federal government will put its weight behind building the green energy economy we need to stop climate change, rather than backing pipelines like the Harper government did.”