It's a preview of things to come - Mega Project, Mega Cost. This problem is exacerbated by the Wall Street meltdown.
Fort Hills Costs Leap to $24 billion (LINK)
Petro-Canada hikes price tag for oilsands project 50 per cent
Shaun Polczer, Calgary Herald
Published: Thursday, September 18, 2008
Petro-Canada on Wednesday set a new benchmark for capital cost overruns in the oilsands after it hiked estimates for the proposed Fort Hills mine by 50 per cent.
The project, originally pegged at $14.1 billion, will now cost about $24 billion.
"We've seen a dramatic rise in capital costs in the past year," said Ron Brenneman, Petro-Canada's president and CEO.
Analysts said UTS will face difficulties coming up with the extra money given the financial turmoil that has rocked Wall Street in recent days, with the collapse of big investment banks like Lehman Brothers and fire sales of Merrill Lynch and AIG.
"Financing was already a concern in the current credit market. With the mounting cost escalation and a sum of $3 billion of additional financing, UTS faces considerable headwinds moving forward," UBS analyst Andrew Potter noted.