Oil-sands cost inflation returns

Soaring oil prices boost profits and spending plans; chronic labour shortages emerging

CANADA’s oil sands are back in fashion with investors, with projected capital spending of C$180bn ($185bn) over the next decade. But so is the fear of renewed hyper-inflation that made a mockery of project budgets in the 2005-08 period. Despite the formation of strategic partnerships such as the Suncor Energy-Total joint venture to spread cost burdens among companies, the infusion of billions of dollars from Asia and all the industry’s talk of proceeding in manageable chunks of 10,000 barrels a day (b/d) rather than 100,000 b/d, the resurgent demand for labour and materials is setting off warnings of potential runaway costs. The more certain the industry becomes that oil prices will remain a