Falling crude prices hit Canadian project, dollar

December 5th, 2008 - 11:05 am ICT by IANS  

Toronto, Dec 5 (IANS) The Canadian oil sector, which has oil-sand deposits second only to that of Saudi Arabia, suffered a big blow Thursday with a Norwegian compnay pulling out of a major project.As crude prices hit record levels in four years, Norway’s StatoilHydro ASA announced its decision to withdraw from a $4-billion oil sand upgrader project in Alberta province.

The company said “prohibitive construction costs, the state of the global economy, uncertain oil price outlook and lack of legislative clarity” made it impossible for it to continue with its bid for the project.

Extraction of oil from Alberta’s oil sands - which carry crude bitumen mixed with sand and minerals and, as Time magazine says, can “satisfy the world’s demand for petroleum for the next century” - has become a costly proposition.

It reportedly costs more than $80 to recover one barrel of crude from oil sands.

On the Toronto Stock Exchange (TSX) Thursday, energy and metal stocks slipped further as the composite index ended 239 points lower at 8,057.82.

Energy shares were down seven percent, with the giant EnCana Corp. retreating $3.06 to close at $49.82. Canadian Natural Resources shares also dived $6.37 to end the day at $41.

In the financial sector, top Canadian banks reported marginal losses, with the nation’s number one bank Royal Bank down $1.08 to close the day at $37.17. TD Bank shares were down 58 cents to end at $41.92.

Falling crude prices continued to push the Canadian dollar down against the greenback. The loonie - as the Canadian is called - slipped 1.54 cents to end at 78.24 cents US.

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