The recent drop in oil prices, in combination with the failing economy, is taking a toll in the development of Canadian oil sands. Because of low labor productivity and increasing costs, the Canadian-based industry is finding it increasingly difficult to compete in the global marketplace. Poor environmental practices and an "uncertain regulatory picture" are, according to a recent report by consultants McKinsey & Co., also contributing factors to a slew of development slowdowns and "postponements."

One high profile example is Royal Dutch Shell. Yesterday, they announced they are holding off on phase II of their Athabasca oil sands project, although they will continue on with their existing expansion operation. Other projects seeing similar actions include (but are not limited to) the $20.6-billion Voyageur oil sands project by Suncor, the $23.8-billion Fort Hills development by Petro Canada, Teck Cominco Ltd. and UTS Energy Corp as well as $6.6-billion Long Lake project by Nexen Inc. and OPTI Canada Ltd. We expect that, as the price of oil begins to climb sometime in the near future, the corporations will continue on with their plans to destroy Alberta for fun and profit.

[Source: Globe & Mail]

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