Weak oil and debt markets may bedevil oil sands plans

CALGARY, Alberta (Reuters) – A double whammy of tumbling crude prices and shaky credit markets could force some companies to delay multibillion-dollar Canadian oil sands projects, cutting the country’s overall output forecast.

Most at risk are developments that are in the design phase but have yet to start construction. Some have already been delayed due to surging costs, a tight labor market and stricter regulatory scrutiny.

“It’s starting to weigh on people’s minds as to what is the break point,” FirstEnergy Capital Corp analyst William Lacey said.

Crude sank nearly 5 percent to $96.60 a barrel on Monday, its lowest level in seven months, on early signs that Hurricane Ike had spared most U.S. energy infrastructure in the Gulf of Mexico and as the U.S. financial system creaked amid Lehman Brothers Holdings’ (LEH.N: Quote, Profile, Research, Stock Buzz) bankruptcy.

Reuters