An oil giant that planned to refine the same Canadian tar sands as BP Whiting has canceled plans for an expansion in Ontario.
Shell Canada is scrapping a proposed refinery project in Sarnia, which would have turned tar-like crude from oil sands in Alberta, Canada, into refinery-ready light oil, the company announced Tuesday.
But BP Whiting's modernization will continue to move forward, BP spokeswoman Sarah Howell said. The company is proceeding with the project, which would allow the refinery to process more Canadian tar sands.
"We've obviously put a lot of work into the plan and background and we remain confident in it," Howell said.
"We are two different companies. We work differently. We have different criteria. Our company is continuing to move forward. We're well-aligned with what the current thought is around bringing increased diversity and security and supply of energy sources."
But Shell's decision could affect BP Whiting's ultimate fate, said Denny Larson, executive director of California-based Global Community Monitor, who has helped the Hammond-based Bucket Brigade protest BP Whiting's modernization. Larson said a firestorm of environmental protests was part of the reason Shell canceled its plans.
"They're never going to acknowledge that because that would encourage people to do it. I think it's a watershed event that a project has been canceled. If you noticed what they said, they did say market forces, labor issues, but they're things that do have an impact on BP and every oil company," Larson said.
Shell spokeswoman Denita Davis disagreed that there were environmental protests of the project, saying Shell received "the utmost support" from provincial government and stakeholders.
"Whenever we analyze, we look at both short- and long- term. That includes availability of resources, contractors, material and the oil market. This project was in the very early stages. We were doing the predevelopment work," she said.
Shell said in a news release it assessed all aspects of the proposed project, including the current project execution environment, market conditions and the current inflationary pressures across the oil and gas industry.
Canadian officials are considering a moratorium on new tar sands projects because of concerns about greenhouse gas emissions. Larson said that could cut off availability of raw material for BP.
Shell officials are considering upgrading facilities in Martinez, Calif., and Deer Park, Texas, to deal with the oil sands.
Davis said a decision would be made at a later time. In the meantime, Shell will continue to operate the Sarnia refinery at its current capacity.
In November 2006, Shell Canada announced its plan to study the viability of constructing and operating a new heavy oil refinery near Sarnia as an expansion of Shell's existing Sarnia Manufacturing Centre.
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