With the price of crude oil at its lowest since 2009 and a lack of pipeline capacity, Shell is suspending the project. The company expects to take a $2 billion restructuring charge as a result.
“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,” the company’s CEO Ben van Beurden said in the announcement.
The news comes as several energy companies are preparing lower than expected earnings for a quarter where the price of oil has fluctuated between $60 and $40. The Shell announcement goes back on a statement made in March which outlined a new re-phasing of Carmon Creek whereby the company would capitalise on the low oil prices.
Shell now says that Carmon Creek ‘does not rank in its portfolio at this time’ due to the ‘lack of infrastructure to move Canadian crude to global commodity markets.’
This is just one more example of the negative effects the declining oil prices are having on the Canadian economy.
Canada's largest independent driller, Precision Drilling also recently reported losses of $87 million and is now making job cuts in Alberta as a result. Similar losses and job cuts can be expected as the oil industry continues to lose investments.