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Oil Change: “Shock waves of anxiety” over Shell’s tar sands move
By Alan Septoff
Friday, January 29, 2010
A few days ago, Shell made news by announcing in the Financial Times that they were scaling back their plans in the Alberta tar sands. That one of the world’s largest oil companies sees reason to reduce investment in the tar sands calls into question the long-term profitability of the tar sands. It also weakens arguments that unconventional oil deposits, like the tar sands, are the way to solve U.S. energy security problems.
Lorne Stockman, blogging at Oil Change International, discusses the implications of Shell’s announcement at length. Some highlights:
“Since the middle of last year I have been writing about the vulnerability of the tar sands industry to a slow down in the growth rate of oil demand. With some of the most expensive cost structures in the oil industry, the future growth of tar sands production requires oil prices to stay high over the long term. But high oil prices exert a deflating effect on the economy and in turn reduce demand and prices.”
and
“So when a company like Shell, the biggest international oil company in the tar sands that has stated on several occasions that its ambition is “to be the leading oil sands operator” starts to show signs of an about turn, the rest of the industry should be worried.”
and
“If Shell now feels that unconventional oil may be too risky and, as stated in the FT, plans to refocus on conventional oil and gas, what does that mean for Alberta, Canada, the tar sands industry and US energy security?”
Tagged with: shell oil, financial times, investor risk, investment, oil change international
