CANADA OILSANDS DEVELOPMENT AT RISK AS COSTS SOAR

EDMONTON, Alberta, Canada - A confidential government memorandum obtained by CBC News warns that soaring costs of developing the Alberta oilsands could put the brakes on the massive project, stalling one of the main engines of the Canadian economy.

The booming oilsands industry supports tens of thousands of Canadian jobs, and pumps billions of dollars a year into the national economy.

 

The memo written by Mark Corey, one of the highest-ranking officials in the federal Department of Natural Resources, warns that if the current trend of spiralling labour and other costs continues, investors may start to turn off the tap on the massive amounts of money needed to develop the oilsands.

"Although current crude prices promote oilsands development, ever-increasing capital and operating costs could make this price insufficient to support oilsands development at forecast levels," Corey writes.

Cost increases are currently "the biggest risk to investment in the sector," and could jeopardize the viability of some projects, he says.

The memo estimates that operating and capital costs to extract a barrel of oil from the tar-like sands have both more than doubled over the past decade.

It blames a chronic shortage of workers and resulting sky-high labour costs as the main cause of increased operating expenses.

Corey's memo reflects a growing concern inside government over the future of the oilsands, and specifically the massive amount of capital investment that will be needed to fuel their continued development.

Source: CBC...More...