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French energy giant Total shelves the Joslyn oil sands mine indefinitely

French energy giant Total shelves the Joslyn oil sands mine indefinitely

French energy major Total E&P announced yesterday that it would be suspending its Joslyn Mine indefinitely. 

The Joslyn lease was purchased from Deer Creek in 2005. Total and Suncor are majority owners of the project (38.25% for Total and 36.75% held by Suncor); the balance is held by Occidental Petroleum and Japanese energy giant Inpex. The project was recently upsized from 100,000 to 160,000 barrels per day in an effort to improve economics. Self-described environmentalists are hailing this as a victory; proof that their relentless propaganda campaign and lack of pipeline capacity can successfully stop future oil sands developments. But this doesn’t tell the whole story. 

Total has a long list of abandoned projects. The Northern Lights Oil Sands Mine (purchased from Synenco) was shelved in 2008 along with the integrated Northern Lights Upgrader in Sturgeon County. They walked away from the Joslyn SAGD facility in 2010. The Voyageur Upgrader, which it acquired through a joint venture with Suncor was officially suspended last year. And now we can add the Joslyn Oil Sands Mine to the list of defunct projects.

Admittedly, this decision was not completely unexpected. With the mammoth Surmont 2 project ready to come online next year (50/50 joint venture with ConocoPhillips) and the $13.5B Fort Hills Mine currently under development (another joint venture with Suncor), Total already has plenty of pots on the oil sands fire. Oil sands operators have long since learned that mega-projects should be staggered as much as possible. The $11B Joslyn Mine would need to complete for labour, shop space, operating staff and pipeline capacity. Economically, this project doesn’t make sense. Not today at least.

Energy stocks and crude oil prices diverge

Energy stocks and crude oil prices diverge

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