Shell to stand pat on oil sands assets
Royal Dutch Shell PLC is unlikely to take on new oil sands projects as it maintains a grip on costs after crude’s crash forced competitors to write down Canadian reserves.
While Shell’s existing oil sands operations generate strong cash flows, the expense of developing new projects discourages more investment, Chief Executive Officer Ben Van Beurden said in an interview.
Oil sands, the reserves of heavy crude found primarily in northern Alberta, lured investors in the past decade as oil’s surge above $100 a barrel made the difficult extraction process economic. But they’ve fallen out of favor after the subsequent market collapse as companies dump expensive projects amid fears that competition from low-cost crude could strand costlier assets.
“All of those are reasons we are unlikely to develop new oil sands projects,” Van Beurden said in London. “There are no plans for growth capital to be invested in oil sands.”