Suncor puts Australian oil shale project on hold

Suncor Energy Inc., Calgary, announced it will spend $13-$22 million (Can.) as its share of a project to resolve operational issues at its a $250 million Stuart joint venture oil shale demonstration project in Australia. The project will be put on hold until concerns about environmental and social impacts are addressed, said Suncor. In addition, the company agreed to an after-tax writedown of $80 million (Can.) on the project, reflecting increased costs and delayed oil production.


Suncor Energy Inc., Calgary, announced it will spend $13-$22 million (Can.) as its share of a project to resolve operational issues at its a $250 million Stuart joint venture oil shale demonstration project in Australia. The project will be put on hold until concerns about environmental and social impacts are addressed, said Suncor. In addition, the company agreed to an after-tax writedown of $80 million (Can.) on the project, reflecting increased costs and delayed oil production.

Environmental groups greeted the news with satisfaction. The Australian arm of Greenpeace has been campaigning against the plant and the technology for some time, claiming oil shale development is environmentally unsound and produces too many greenhouse gas emissions. Besides, Greenpeace says, the Stuart project is over budget and likely not commercially viable.

Nevertheless, Suncor seems optimistic about continuing plant development and making oil shale technology commercial. "Despite the challenges we have faced, Suncor still believes operational problems can be resolved," said Rick George, Suncor president and chief executive officer. "While we take steps to make the plant operational, we'll take a prudent approach to project development.

"Our first priority is to operate the plant reliably and address community concerns about plant emissions and noise," said George. "We're going to focus on this effort and put further stages of development on hold until the operational challenges are resolved."

The plant upgrades could take until April 2001 to complete. Suncor anticipates that, once commissioning is finished, the company could need an additional 6-9 months of operational experience to demonstrate the technology before making longer-term investment decisions.

George said other sustainability issues must be addressed if oil shale development on a commercial scale is to be successful over the long term.

"Oil shale exists in a number of countries throughout the world, where it is viewed as an important resource in meeting the growing need for energy," said George. "We must constantly earn the right to operate and grow our business by demonstrating that economic and social benefits and high standards of environmental performance can be achieved."

Suncor operates the oil shale project in Gladstone, Australia, on behalf of its joint venture with Southern Pacific Petroleum NL and Central Pacific Minerals NL.

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