Royal Dutch Shell plc has decided not to continue with the construction of the 80,000-barrel-per-day Carmon Creek thermal in-situ oil sands project located in Alberta, Canada. Carmon Creek is 100% Shell owned.
Shell originally sanctioned the project in October 2013 and announced in March that the project would be re-phased to take advantage of the market downturn in order to optimize design and retender certain contracts. After careful review of the potential design options, updated costs, and the company’s capital priorities, Shell’s view is that the project does not rank in its portfolio at this time. This decision reflects current uncertainties, including the lack of infrastructure to move Canadian crude oil to global commodity markets.
Shell 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 $2 billion as a result of this decision with the third-quarter 2015 results, which will be included as an identified item. The project's proved reserves, estimated at 418 million barrels of bitumen at the end of 2014, will be de-booked, and the project's estimated recoverable petroleum resources will be classified as contingent resources.