Total SA (FP) urged the U.S. to approve the $5.4 billion Keystone XL pipeline to unplug a bottleneck that’s stalling the development of Canadian oil sands.
“The pipeline has to be done,” Chief Executive Officer Christophe de Margerie told reporters at the World Economic Forum in Davos. “It’s now up to the U.S. to make an effort.”
The proposed pipe to ship heavy crude from Alberta to refineries on the Gulf of Mexico, which is opposed by green groups, is undergoing a final environmental review. Canadian Prime Minister Stephen Harper said last week a decision to seek more comment suggests President Barack Obama may postpone a ruling that’s already been more than five years in the making.
Total, Europe’s third-biggest oil company, has slowed development of its own reserves in the region, de Margerie said. The French company booked a $1.65 billion loss in the first quarter last year on the canceled Voyageur Upgrader project in Alberta after selling its stake to Suncor Energy Inc. (SU)
Alberta oil sands are beset by rising labor costs and a shortage of workers as well as a discount for the price of Canadian heavy crude as U.S. oil output exceeds expectations.
“It’s more complicated than what we thought,” de Margerie said. “Costs have exploded. Requests from the community have increased. We have to take it into account and decide whether it’s worth it. If production costs rise above the selling price, things will stop.”
Total bought stakes in oil-sands developments in 2010 from Suncor, Canada’s largest oil producer by market value, forming a “strategic alliance” for the Fort Hills, Joslyn and Voyageur projects. At the time Jean-Michel Gires, Total’s president of Canadian exploration and production, said the explorer was taking a “long-term bet” on oil sands.
Total has pledged to raise production from new fields and explore more aggressively for reserves to revive output growth.
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