(Bloomberg) — Canada’s oil sands industry may have already built its last big mine.
The cancellation of Teck Resources Ltd.’s Frontier project in northern Alberta — which envisaged producing more crude than OPEC member Gabon — epitomizes the struggles of an industry that has already seen most foreign investors flee. It’s not clear that any other proposed mine would be able to clear the hurdles that felled Frontier in the years to come, possibly spelling the end of an era of megaprojects that transformed North America’s energy landscape by turning Canada into the top foreign crude supplier to the U.S.
“This may be the nail in the coffin,” said Laura Lau, who helps manage C$2 billion ($1.5 billion) in assets at Brompton Corp. in Toronto. “I would expect some smaller projects would have a better chance going through.”
On top of middling oil prices, a pipeline capacity shortage in Canada and heightened competition from U.S. shale, the oil sands have become a particularly shunned industry in a world of rising concerns about climate change, leading some major funds to divest their holdings. And with speculation oil demand could peak in 10 years or so, companies are growing increasingly wary of committing to multibillion-dollar projects that require decades of operation to pay out.
The oil sands of Alberta have drawn the ire of environmental activists because of the region’s vast open-pit mines that require the clearance of forest, produce massive lakes of wastewater and consume more energy than other ways of extracting oil. Refining the sticky, black bitumen scooped from some mines in so-called upgraders is also very carbon-intensive. Newer, smaller projects, while more efficient, still use a lot of energy to extract the oil with the help of steam.
While attempts to make Canada’s oil sands into an…
Source: FuelFix
