CALGARY, ALTA. - Calgary-based company US Oil Sands Inc. announced it is planning to defer the start-up of its oilsands mining operation in eastern Utah, about a four-and-a-half-hour drive southeast of Salt Lake City. US Oil Sands is also laying off employees.
The cost cutting measures are being done to give the company time to close a $7.5-million arrangement with ACMO.
The $100-million project would be the U.S.'s first commercial-scale oilsands mining operation.
With mechanical construction of the project complete, the company focused on and has substantially completed commissioning.
As a result of liquidity constraints, the company elected to defer final commissioning steps that would have introduced liquids and solids into the extraction facility, thereby allowing for ease of equipment preservation and lay-up of the facility pending closing of financing.
In a release, the company explained that in order to preserve working capital, it has temporarily laid off most Canadian and U.S. employees, retaining only those essential to close the financing. Certain U.S. employees may also be retained on a part-time or short-term basis to assist in equipment preservation, lay-up of the facility and to maintain basic U.S. operations.
US Oil Sands stated it had expected to close the financing in mid-to-late December and bring back employees in early January 2017 to complete the last few commissioning procedures that will lead into commercial production.
"This has not been an easy period for all our stakeholders. We have made considerable efforts in sourcing additional capital and ultimately are fortunate to continue to have ACMO provide the financing," said Cameron Todd, CEO of US Oil Sands.
"The decisions we have had to take have not been made lightly as we know they affect many businesses and families. But slightly delaying the project and completing this financing is believed to be in the best interest of all concerned, including our shareholders. We are looking forward to making first oil early into 2017 and profitably demonstrating the company's commercial technology."