Total Dumps Canadian Oil Sands Project for $1.65bn Loss

Oil Price ^ | 31 March 2013 | Jen Alic

[Lorianne]

France’s Total SA (NYSE: TOT) will sell its 49% stake in its Canadian oil sands project to Suncor Energy Inc. for $500 million, netting the French oil giant a $1.65 billion loss on the beleaguered project.

Total would have had to spend another $5 billion (at least) on the Alberta oil sands Voyageur Upgrader project over the next five years—an investment that cannot be justified according to its executives.

The project is beleaguered by increasing labor costs, a shortage of labor and the falling prices of Canadian heavy crude against rising US oil production. Profit margins have narrowed to the extent that the project is no longer economically feasible.

Not only does the Total divestiture raise questions about the long-term viability of Canadian oil sands investments, it also raises questions about whether the controversial Keystone XL pipeline project is really in the US’ interests—at a time when US oil output is rising and Canada’s oil sands are becoming less strategically advantageous.

Total is still hanging on to two other oil sands projects in Canada—at Fort Hills and Joslyn—and for now there is no talk of divesting, but later this year Total will make a final decision on its Fort Hills investment, according to Bloomberg.

[muawiyah]

Given the price we have to pay politically, and otherwise, when we run short of oil in the US and have to buy it from the Arabs, probably best we keep a lot of ours IN THE GROUND but available to be pumped and that we use up Canada’s almost infinite supply of tarsands to crush the Arabs in the marketplace.

[cicero2k]

Nah, I blame the mosquitos and black flies, and the lack of women.

[littleharbour]

So you’ve been to Fort McMurray. :)

[thackney]

The stone age didn’t end because we run out of stones.

Neither did the iron or bronze age.

Keeping oil in the ground while funding your enemies is not the way to plan for the future.

[muawiyah]

Hmm, interesting concept ~ Canada as an enemy. Dibs on Toronto!

[thackney]

Oil discounts expected to cost Canada $15B per year
http://www.calgaryherald.com/business/energy-resources/discounts+expected+cost+Canada+year/8190302/story.html
APRIL 3, 2013

Discounts being paid for Canadian crude have narrowed substantially in recent weeks but still stand to cost producers and governments billions for the next few years, a new report says.

In the latest of many studies warning that the United States is a shrinking market for Canadian energy products, CIBC said Wednesday that Canada will continue to give up about $15 billion US in annual “opportunity costs” even if the Keystone XL pipeline wins U.S. government approval this year.

The cost figure is calculated based on the additional discount Canadian crude receives versus historical norms.

...

He explained WCS or Western Canada Select, a blend of heavy crudes, is trading at near its historical discount of $17 US per barrel relative to WTI or New York-traded West Texas Intermediate. But WTI is far below its historical average $2 premium over European-traded Brent oil.

[thackney]

Hmm, interesting concept ~ Canada as an enemy. Dibs on Toronto!

LOL!

I was talking about OPEC. We won't buy less from Canada because we produce more of ours. But we will buy less from OPEC if our domestic production continues to increase.

[thackney]

For comparison:

I did recognize the humor, but I wanted to show the info. We can produce a lot more and still take more from Canada.

[1010RD]

Resources must be used to be valuable. Tomorrow never comes.

[1010RD]

What did Suncor see in it?