Exxon just decided to keep a big chunk of its tar sands in the ground.
In a press release, the company said that oil prices are so low that it’s simply not profitable to dig up and process the 3.5 billion barrels of fuel buried in one of Canada’s highest-quality deposits of oil sands. That’s a huge amount, as much as the entire petroleum consumption of the United States for six months.
Exxon has long resisted calls to erase these reserves from its books, insisting that it would dig up the tar sands someday, according to Inside Climate News. When a company erases an investment off the books, it’s effectively saying, “We bought something that’s now worthless.” This isn’t an easy thing to admit.
But plenty of companies are fessing up. Last week, ConocoPhillips wiped a billion barrels of oil sands off its books; in November, Norway’s Statoil said it was getting out of the Canadian oil sands business; and in 2015, Royal Dutch Shell fled another big oil sands project, which knocked a $2 billion dent in its bottom line. All told, oil companies have “delayed or canceled at least 64 projects in Alberta’s oil sands” since 2014.
What’s behind all this? Low oil prices. In other words, the market is convincing companies to keep these fossil fuels in the ground. Add climate regulations on top of that, and it could be the death of tar-sands development.