SALT LAKE CITY — Environmentalists are celebrating after the Canadian company behind a controversial tar sands development in eastern Utah announced it is scaling back work on its project.
Calgary-based U.S. Oil Sands Inc. announced plans Thursday to cut back on construction on its PR Spring project, which is located in the Book Cliffs about 170 miles from Salt Lake City and is 85 percent complete. The company said low oil prices forced two of its major contractors to shutter operations in Utah, and said it didn't have all the financing it needed.
"The oil industry is facing one of the most challenging environments it's ever seen, and it is prudent for us to adjust our construction plan accordingly," said U.S. Oil Sands CEO Cameron Todd, adding that the cutback would be designed so it can restart quickly when conditions improve. "The company's actions today help ensure US Oil Sands will be a future industry leader."
While companies extract petroleum from sand in Canada and Venezuela, the $60 million Utah project would be the first commercial effort of its kind in America. U.S. Oil Sands says it uses natural citrus extract to safely process the sand, but opponents say it will contaminate water and destroy wildlife habitat.
Conservation groups have challenged the permits authorizing the project and have been arrested for chaining themselves to equipment in an effort to thwart construction. But the biggest obstacle appears to be crude oil prices that have tumbled to about $31 a barrel, down from a peak of $147 a barrel in 2008.
Rob Dubuc, a Utah-based attorney with the environmental group Western Resource Advocates, says the work slowdown was at least a temporary victory.
"That makes my day and everyone's day who likes clean air, clean water and a friendly climate," he wrote in a blog post on the group's website, arguing that tar sands result in up to three times the carbon pollution of conventional oil.
"Mindless of how ridiculous this policy choice is, Utah politicians continue to declare that the state is "open for business" when it comes to development of these very dirty fossil fuels," Dubuc said, calling the endeavor "a bad idea at any price."