Canada energy sector sidelined as Big Oil chases fatter profits
By Nia Williams
CALGARY, Alberta (Reuters) - Canada's energy sector has fallen out of favor with international oil majors, who are scaling back ambitions and walking away from reserves in the ground there to focus on lower-cost and higher-margin opportunities elsewhere.
Billion-dollar bets on Canada's oil sands went sour this week for Exxon Mobil Corp (XOM.N: Quote) and Conoco Phillips (COP.N: Quote). Between them, the two companies erased from their books nearly 5 billion barrels of bitumen, the heavy, viscous oil found under Alberta's boreal forest. This has wiped about $250 billion worth of oil from their reserves.
Conoco has put $2 billion of Canadian natural gas assets on the block.
The companies joined the list of foreign players to take a hit in a Canadian energy patch where a two-year slump in global oil prices has discouraged the high investments needed to get projects off the ground.
While crude prices have recovered to above $50 a barrel from a low of $26 a year ago, that is not enough to make Canada's oil sands profitable. Even some of Canada's conventional energy plays are expensive at current crude prices.
Canadian producer Husky Energy Inc (HSE.TO: Quote), owned by Hong Kong billionaire Li Ka-shing, is weighing the sale of some Eastern Canadian offshore crude assets, people familiar with the matter told Reuters.
The oil sands have caused energy companies the most pain.
Devon Energy Corp (DVN.N: Quote) Chief Executive Officer Dave Hager summed up the problem this month when discussing the Pike oil sands project, which awaits a company decision later this year. Continued...