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Testing times for Alberta's oil sands

With project costs rising and credit hard to secure, forecasts for oil-sands production are being scaled back, writes WJ Simpson

RISING capital costs are threatening the economics of several Alberta oil-sands projects. The cost for a new production facility has reached at least C$160,000 ($148,000) per flowing barrel, compared with industry standards of C$100,000 two years ago and C$45,000 in the late 1990s. Without factoring in the full effect of the global credit crisis and the unknown costs of carbon-emissions-reduction policies planned by the Canadian government (see p10), the chances of raising the estimated C$170bn of capital required to keep projects on track over the next decade are evaporating. Aside from what happens to crude prices, says FirstEnergy Capital analyst William Lacey, the "broader financial ou

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