Shell said the layoffs were part of its efforts to build a competitive oil sands business, though it did expect crude prices to fluctuate.

“Oil sands operations are long-term projects and we take into account the fact that crude prices will fluctuate over that time,” a Shell spokesman said.

“Even if the oil price had remained stable, we would still be looking at all aspects of our business to ensure we remain competitive.”

The company said the scale of the cutback would be small, amounting to 5-10% of the over 3000 strong workforce.

Shell Albian Sands – the mining operation portion of the Athabasca oil sands project – consists of the Muskeg River and Jackpine mines. Production from these mining and extraction operations accounts for 17% of Canada’s total oil production.

The Muskeg River mine’s current production capacity is 155,000 barrels per day and the Jackpine mine has the capacity to produce 100,000bpd.

Despite the cuts, Shell said it sees opportunities for growth in its oil sands operations, with potential future growth planned in debottlenecking, expanding Jackpine and progressing the Pierre River mine.

“In the near term, growth will come from a series of debottlenecking projects, which could add up to 85,000bpd over the next 10 years,” Shell said.

Regulatory approval is being sought for a 100,000bpd expansion of the Jackpine mine; while regulatory approval is also being sought for the proposed Pierre River mine development, which would yield another 200,000bpd.

Shell is the operator and majority shareholder of the Athabasca oil sands project, a joint venture between Shell Canada (60%), Chevron Canada (20%) and Marathon Oil Canada Corporation (20%).

The project consists of Shell Albian Sands mining and extraction operations, north of Fort McMurray, the Scotford Upgrader and the proposed Quest carbon capture and storage project north of Edmonton.

Trucks take the oil sands from the mines to crushers where it is prepared for extraction. Using warm water the bitumen is separated from the sand and clay. The thick bitumen is then diluted with a solvent so that it can be transported via pipeline to the Scotford Upgrader and converted into synthetic crude oil.