Shell Canada Abandons Application To Develop Pierre River Oilsands Project

Royal Dutch Shell has abandoned plans to develop the proposed Pierre River Mine in Alberta, Canada. A development that has been in Shell’s project since 2007, Shell Canada said the mine is “not currently a priority” following the decline of prices of oil in the world market.

"Our current focus is on making our heavy oil business as economically and environmentally competitive as possible," Lorraine Mitchelmore, Shell Canada president, said in a press statement. But the global oil giant will continue to hold the leases and will seek regulatory application in the future "when the time is right." The Pierre River mine project north of Fort McMurray, Alta was expected to churn out 200,000 barrels a day.

Royal Dutch Shell will focus on instead on improving the profitability of its existing 255,000-bpd oil sands operations since the project already has the necessary regulatory approvals. "The Pierre River Mine remains a very long-term opportunity for us," Mitchelmore said.

The company expects the cancellation to not create a big impact on jobs since the project is still only in the preliminary stages. Way back in 2007, Royal Dutch Shell envisioned to commence construction in 2010, while production was forecast to start in 2018.

Royal Dutch Shell is just one of numerous oil producers who have pressed on the brakes on pursuing growth projects in Canada because of the continued tumble of oil prices. In January, Cenovus Energy Inc, Total SA and Statoil ASA announced delaying big oil sands projects due to weak economics. On Monday, West Texas Intermediate oil was down 2.7 percent to U.S. $49.81 a barrel.

Cenovus Energy Inc reduced its 2015 budget by $700 million and Canadian Natural Resources Ltd by $2.4 billion. Suncor Energy Inc., meantime, slashed by 1,000 its workforce and its budget by $1 billion.

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