Suncor Energy Inc., which recently merged with Petro Canada, has cancelled plans to build a $1 billion heavy-oil facility in east-end Montreal.
The Calgary-based company says the plan is not viable in the current market.
Suncor is focusing on core projects as it continues to absorb Petro-Canada.
The proposal had called for the construction of a "coker" that would transform 25,000 barrels a day of heavy oil into lighter, refinery-ready crude.
Suncor is primarily concerned with developing projects in the Alberta oilsands, which are the second largest oil reserves in the world.
Diminishing returns
Petrocan, which had laid plans for the coker, initially said it hoped to achieve a 20-per-cent return on the project. But a rush of similar projects, as well as diminishing supplies from Mexico and Venezuela, have created excess upgrading capacity for heavy oil and squeezed upgrading profits.
Suncor's decision to cancel the coker comes less than a week after it disclosed plans to lay off 1,000 people, many of them Calgary head office workers, in the interest of saving costs.
