Shell Canada pushing back startup of Carmon Creek oilsands project

CALGARY — Shell Canada says its Carmon Creek oilsands project will start up a couple of years later than planned as the company looks to drive down costs.

With low crude prices curbing construction activity in northern Alberta, contractors and service providers have been under pressure to sharpen their pencils.

Shell is altering the schedule for the first two phases of Carmon Creek so that it can improve its design and retender some contracts, said spokesman Cameron Yost.

"We are still early enough in the schedule to make adjustments to ensure the long-term competitiveness of a project that will ultimately have a lifespan of more than 30 years," he said in an emailed statement.

First oil from the steam-driven project now is expected in 2019.

"Carmon Creek remains a priority for Shell and we're continuing to advance the project," said Yost.

Shell doesn't make decisions based on short-term swings in commodity prices, since its projects typically have to make economic sense over a 30- to 50-year time horizon.

"The current market downturn does, however, create an opportunity to find some cost reductions," said Yost.

Shell announced the decision to go ahead with Carmon Creek in October 2013. The project, near Peace River, Alta., targets production of 80,000 barrels a day.

In February, Shell pulled its regulatory application for the proposed Pierre River oilsands mine north of Fort McMurray, Alta., which had aimed to produce 200,000 barrels a day.

Lauren Krugel, The Canadian Press