Teck Resources has withdrawn its application for a regulatory review of the Frontier oil sands project, the company said in a news release.
"Investors and customers are increasingly looking for jurisdictions to have a framework in place that reconciles resource development and climate change, in order to produce the cleanest possible products," Teck's chief executive wrote in a letter to the federal Minister of Environment and Climate Change.
"This does not yet exist here today and, unfortunately, the growing debate around this issue has placed Frontier and our company squarely at the nexus of much broader issues that need to be resolved. In that context, it is now evident that there is no constructive path forward for the project."
Teck's decision to shelve the Frontier project comes ahead of this week's deadline for the federal government to either approve or reject the project, with uncertainty rife as to what path Ottawa would choose in a bid to appease environmentalists and energy industry supporters alike.
Earlier this month, the federal government even prepared an aid package for Alberta in case the Teck Resources project did not go through, according to a Reuters report.
"Rejecting Teck without providing Alberta something in return would be political suicide," one source said. This means the government must be prepared to compensate the oil province to dull the pain.
Yet Teck's decision is not a surprising one. The company warned two years ago that "There is uncertainty that it will be commercially viable to produce any portion of the resources," referring to the Frontier project, conceived and planned in a much better oil price environment more than a decade ago.
Alberta's Premier Jason Kenney, however, saw something fishy with the decision.
"The timing of the decision is not a coincidence," Kenney said in a statement as quoted by the Financial Post. "This was an economically viable project, as the company confirmed this week, for which the company was advocating earlier this week, so something clearly changed very recently."
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More