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CALGARY — Teck Resources Ltd. is delaying the planned startup of a multibillion-dollar oil sands mine by at least five years, becoming the latest company to push back development as shaky energy markets threaten profits in the high-cost sector.
Vancouver-based Teck told regulators that production from its proposed Frontier oil sands mine about 110 kilometres north of Fort McMurray, Alta., won’t start until 2026, instead of 2021 as originally planned. The company now says it will build the 260,000-barrel-a-day mine in two phases instead of four, with construction starting in 2019, according to an update filed with the Canadian Environmental Assessment Agency.
The moves are fresh evidence of a broader pullback under way in northern Alberta, as oil prices show no sign of recovering to triple-digit territory – a threshold analysts say is needed to justify new mining developments such as Frontier.
Teck, which has not committed to building the mega-mine, has pegged the cost of Frontier at roughly $20.6-billion, making it one of the most expensive oil sands projects contemplated to date. Such developments are increasingly giving way to smaller, steam-driven projects, as the industry adapts to crude prices that remain at about half levels of recent years.
“The prospect of mining projects going ahead in this environment, or even an improvement from this environment, is pretty unlikely, if at all,” said Chris Cox, analyst at Raymond James Ltd. in Calgary.
“I put it as very unlikely that it actually gets approved, unless we see triple-digit oil prices again.”
U.S. benchmark West Texas Intermediate oil edged up 2.2 per cent to $52.78 (U.S.) a barrel on Thursday, despite lingering concerns over the Greek economic crisis and a possible slowdown in Chinese demand.
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