Tar sands project cost soars by 50%

[GliderGuider]

Fort Hills costs leap to $24 billion

Petro-Canada on Wednesday set a new benchmark for capital cost overruns in the oilsands after it hiked estimates for the proposed Fort Hills mine by 50 per cent.

The project, originally pegged at $14.1 billion, will now cost about $24 billion.

"We've seen a dramatic rise in capital costs in the past year," said Ron Brenneman, Petro-Canada's president and CEO.

The news sent UTS Energy Corp., which holds 20 per cent of the Fort Hills partnership, plummeting on the Toronto Stock Exchange where it was one of the most actively traded stocks on extraordinarily heavy volume of 26.5 million units.

Tiny UTS, which has no production or cash flow, must now come up with an extra $3.6 billion to fund its share of the project.

Analysts said UTS will face difficulties coming up with the extra money given the financial turmoil that has rocked Wall Street in recent days, with the collapse of big investment banks like Lehman Brothers and fire sales of Merrill Lynch and AIG.

The combination of the credit market failure and the potential for a further drop in oil prices is going to put the kibosh on a lot of energy development, from tar sands and nuclear power to wind and solar. On the bright side, the onset of a global depression will mean we won't need all that energy anyway.

[Massacure]

1. Inflation is high in every sector right now.

Raising $3.6 billion won't be easy either with the current credit situation.

[hunter]

2. Mother Nature should take some economics classes.

She doesn't seem to understand basic economic principles.