MEG Energy Cancels Tar Sands/Oil Sands Expansion, Cites Line 3 Delay
Calgary-based MEG Energy Corporation is blaming a one-year delay in completing the controversial Line 3 pipeline for its decision to shut down expansion of its Christina Lake tar sands/oil sands project in northern Alberta.
CEO Derek Evans said the company has already spent about 60% of the C$275-million budget for the expansion, “and it will take about a year to bring into production once approved,” CBC reports. “But he says there’s no point in doing so if there’s no pipeline capacity to carry the oil to market.”
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The project would have increased MEG’s production at Christina Lake from 100,000 to 113,000 barrels per day.
“MEG shares fell by as much as 9.7% to $4.75 in early trading on the Toronto Stock Exchange after it reported an operating loss of $118 million in the fourth quarter compared with an operating profit of $44 million in the same period of 2017,” CBC adds. “It blamed the bigger loss on discounts on western Canadian crude as its average realized bitumen price fell to $13.90 per barrel from $48.30.”
In a recent open letter to Alberta Premier Rachel Notley and opposition leader Jason Kenney, economist Robyn Allan urged politicians of all stripes to pay attention to fossils’ actions, rather than their words and avoid placing their bets on a declining fossil industry. “The Alberta oilsands sector is a mature sector, not a growth sector,” she wrote. “It has entered the phase in its life cycle where corporate boardroom discussions have transitioned from the inevitability of rapid oilsands expansion to how best to sustain current production.”