​Shell shuns oilsands growth as low crude prices force cost control

Royal Dutch Shell CEO Ben van Beurden. Image: Shell

Royal Dutch Shell Plc is unlikely to take on new oilsands projects as it maintains a grip on costs after crude’s crash forced competitors to write down Canadian reserves.

While Shell’s existing oilsands operations generate strong cash flows, the expense of developing new projects discourages additional investments, Chief Executive Officer Ben Van Beurden said in an interview.

Oilsands, the reserves of heavy crude found primarily in northern Alberta, lured investors in the past decade as oil’s surge above $100 a barrel made the difficult extraction process economic.

But they’ve fallen out of favor following the subsequent market collapse as companies dump expensive projects amid fears that competition from low-cost crude could strand costlier assets.

“All of those are reasons we are unlikely to develop new oilsands projects,” Van Beurden said in London. “There are no plans for growth capital to be invested in oilsands.”

Exxon Mobil Corp. slashed reserves after removing the $16 billion Kearl oilsands project in Athabasca from its books last week. A day earlier, ConocoPhillips said that erasing oilsands barrels had reduced its reserves to a 15-year low. In 2015, Shell itself took a $2 billion charge as it shelved an oilsands project in Alberta, and last year sold other assets in the area for about $1 billion.

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