Despite Record Profits, Shell Halts Oil Sands Project

Earlier this week, when BP announced record profits, it signaled it was going to invest more in oil sands. Yesterday, as Shell smashed analysts predictions and posted a 71% rise in profits to $10.9bn, it did exactly the opposite.

Although Shell’s profits mean the company is awash with cash because of the high oil price over the summer, the current oil price is tumbling and could dip below $60. Meanwhile labour costs are soaring.  This means the oil giant has indefinitely postponed an investment decision on the second expansion of its oil sands project near Fort McMurray, in Northern Alberta.

Jeroen van der Veer, Shell’s chief executive, said that the decision had been taken because of “significant industry inflation and a tight labour market” in the Alberta region. “This final investment decision was originally planned for 2009, but we wait for costs to cool down before any new investment decision is made.”

Although Shell would not comment on the expansion’s projected total cost, analysts are saying it could be as much as C$16 billion to build new pipelines, new extraction plants and an enlarged bitumen upgrader in Scotford.

The turn-around at Shell is significant. It was only a few months ago that Shell was claiming that oil sands were part of its long-term solution to secure and safe energy – see the Ad above, which was later censored for being misleading.

Analysts are now beginning to wonder whether the oil sands bubble has burst, with projects worth more than C$40 billion postponed this month alone. Several companies, including Suncor, PetroCanada, Nexen and Opti Canada, have all delayed investment plans.

The delay in developing this dirty, climate-killing, fuel can only help the climate. New research shows that temperature rises in the Antarctic as well as the Arctic are the result of man-made emissions of greenhouse gases.

The new study shows that Antarctica has been caught up in the changes to the global climate over the past 60 years and that this warming cannot be attributed to natural variations.

“We’re able for the first time to directly attribute warming in both the Arctic and the Antarctic to human influences on the climate,” said Nathan Gillett of the Climate Research Unit at the University of East Anglia, UK, who led the study, published in the journal Nature Geoscience.

So that is another one of the sceptic’s arguments shot down. Their next “flat earth argument” will be that Oil Sands is good for the climate and energy security.

Oh and that pigs can fly.