Shell Canada, a wholly owned subsidiary of Royal Dutch Shell, has informed its employees to shun the pre-development and engineering work on the heavy oil refinery expansion near Sarnia, thereby indefinitely putting hold on the multibillion dollar refinery expansion plan. As per a company authority, an assessment of a number of factors including the availability of resources, equipment costs, long lead times on equipment, the inflation seen in oil and gas projects have led to the announcement.
Had the heavy crude expansion plan being realized in Sarnia, it would have not only processed up to 200000 barrels a day of heavy crude from the Canada's northern Alberta oilsands operations but also employed thousands of construction workers for about four years and created hundreds of jobs in the future. However, Shell's current 72000 barrel per day Sarnia facility will continue processing oil from variety of sources including a few from Alberta.
As far as Shell's expansion plans are concerned, it is looking to expand the output form its Athabasca oilsands operations near Fort McMurray, Alta. In addition, the company has also planned an upgradation worth US$ 27 bln adjoining to its Edmonton-based Scotford refinery which would convert the raw oilsands feedstock into oil that could further be easily refined into gasoline and other products.
Owing to the saturation of the Scotfird refinery, Shell Canada is on hunt for other options which might well include the existing refineries on the West Coast and those along the U.S. Gulf Coast.