Shell halts Carmon Creek oil sands project, to take $2bn charge

Royal Dutch Shell has decided to halt construction of its 80,000 barrel a day Carmon Creek thermal oil sands venture in Alberta, Canada due in part to a lack of infrastructure to move Canadian crude oil to global commodity markets.

Shell had sanctioned the project in October 2013 and announced in March of this year that it would be re-phased to take advantage of the market downturn to optimise design and retender certain contracts.

However, Shell said that after careful review of the potential design options, updated costs, and the company’s capital priorities, its view is that the project does not rank in its portfolio at this time.

Chief executive officer Ben van Beurden said: “We are making changes to Shell’s portfolio mix by reviewing our longer-term upstream options worldwide, and managing affordability and exposure in the current world of lower oil prices. This is forcing tough choices at Shell.”

Shell said it will retain the Carmon Creek leases and preserve some equipment while continuing to study the options for this asset.

The company expects to take net impairment, contract provision, and redundancy and restructuring charges of some $2bn as a result of this decision with the third quarter 2015 results, which will be included as an identified item.

At 1000 GMT, Shell shares were up 1% at 1,725.50p.