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Shell Committed to Oil Sands, to Maintain Investments, CEO Says

Bloomberg

 

 

By Fred Pals

Jan. 9 (Bloomberg) — Royal Dutch Shell Plc remains committed to investing in Canadian oil sands after putting on hold the expansion of the second phase of the Athabasca project in Alberta, its chief executive officer said today.

“Looking at the long-term energy agenda, the Canadian oil sands will be exploited,’’ Jeroen van der Veer said in an interview in Shell’s corporate magazine which will be released tomorrow. “And we will continue to expand, though we have postponed the expansion for now,’’ Van der Veer said.

Extraction of crude from oil sands is more expensive than from more conventional sites because of higher labor and operational costs. Shell said Oct. 30 it is pressing ahead with the first expansion phase of its Athabasca Canadian oil-sands project, while putting further investment there on hold because of mounting local construction costs.

The company expects to add 250,000 barrels of oil production by the end of this year, helped by winter oil output from its Sakhalin project in Russia’s Far East coming on line soon.

In the interview, Van der Veer said even under the current market circumstances the company will continue to be a “relatively large investor.”

Cutting or stopping investing would be “highly undesirable. We have made that mistake before and we learned a lesson from it,’’ Van der Veer said, referring to the late 1990s when crude prices collapsed and oil companies curtailed spending. Van der Veer said he is urging colleagues to control costs.

To contact the reporter on this story: Fred Pals in Amsterdam at [email protected]

Last Updated: January 9, 2009 14:53 EST

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