[BCNnet] Shell Oil backs out of oil sands project

[Carolyn A. Marsh]

Shell backs out of oil sands project
(http://www.post-trib.com/business/1048690,shell.article)

July 10, 2008

By Gitte Laasby and Christin Nance Lazerus 

Post-Tribune staff writers 

An oil giant that planned to refine the same Canadian tar sands as BP
Whiting has canceled plans for an expansion in Ontario. 

Shell Canada is scrapping a proposed refinery project in Sarnia, which would
have turned tar-like crude from oil sands in Alberta, Canada, into
refinery-ready light oil, the company announced Tuesday. 

But BP Whiting's modernization will continue to move forward, BP spokeswoman
Sarah Howell said. The company is proceeding with the project, which would
allow the refinery to process more Canadian tar sands. 

"We've obviously put a lot of work into the plan and background and we
remain confident in it," Howell said. 

"We are two different companies. We work differently. We have different
criteria. Our company is continuing to move forward. We're well-aligned with
what the current thought is around bringing increased diversity and security
and supply of energy sources." 

But Shell's decision could affect BP Whiting's ultimate fate, said Denny
Larson, executive director of California-based Global Community Monitor, who
has helped the Hammond-based Bucket Brigade protest BP Whiting's
modernization. Larson said a firestorm of environmental protests was part of
the reason Shell canceled its plans. 

"They're never going to acknowledge that because that would encourage people
to do it. I think it's a watershed event that a project has been canceled.
If you noticed what they said, they did say market forces, labor issues, but
they're things that do have an impact on BP and every oil company," Larson
said. 

Shell spokeswoman Denita Davis disagreed that there were environmental
protests of the project, saying Shell received "the utmost support" from
provincial government and stakeholders. 

"Whenever we analyze, we look at both short- and long- term. That includes
availability of resources, contractors, material and the oil market. This
project was in the very early stages. We were doing the predevelopment
work," she said. 

Shell said in a news release it assessed all aspects of the proposed
project, including the current project execution environment, market
conditions and the current inflationary pressures across the oil and gas
industry. 

Canadian officials are considering a moratorium on new tar sands projects
because of concerns about greenhouse gas emissions. Larson said that could
cut off availability of raw material for BP. 

Shell officials are considering upgrading facilities in Martinez, Calif.,
and Deer Park, Texas, to deal with the oil sands. 

Davis said a decision would be made at a later time. In the meantime, Shell
will continue to operate the Sarnia refinery at its current capacity. 

In November 2006, Shell Canada announced its plan to study the viability of
constructing and operating a new heavy oil refinery near Sarnia as an
expansion of Shell's existing Sarnia Manufacturing Centre. 

Contact Gitte Laasby at 648-2183 or glaasby at post-trib.com. 

Contact Christin Nance Lazerus at 648-3086 or cnance at post-trib.com. 

Comment on this story at www.post-trib.com. 

 

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