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Utah oil sands project hits delay

SALT LAKE CITY — A Canadian company delayed the startup of its oil sands mining operation in eastern Utah and laid off both Canadian and U.S.-based employees until a new financing deal is struck with its largest shareholder.

US Oil Sands, based in Calgary, announced the layoffs and project delay at the PR Spring mine as a cost-cutting move until it closes a $7.5 million arrangement with ACMO.

"This has not been an easy period for all of 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, chief executive officer of US Oil Sands.

The company did not specify how many employees, including those in Utah, are impacted.

Todd characterized the layoffs as temporary and the delay as "slight" until the funding package is in place to complete 35 deferred steps out of a 996-step commissioning plan of the mine.

While the project is mechanically complete, Todd said the final commissioning steps involve the introduction of liquids and solids into the system, an action necessary for active mining operations.

The $100 million project — which would be the nation's first commercial-scale oil sands mining operation — would extract bitumen from oil sands using a citrus solvent and without the use of tailing ponds. Bitumen is a semisolid, oil-based substance. The U.S. Department of the Interior estimates there are between 12 billion and 19 billion barrels of oil sands resources in Utah.

US Oil Sands has 100 percent interest in bitumen leases covering 32,005 acres in the Uinta Basin.

Todd said the financing deal is expected to be reached by mid-December, with employees scheduled to return to work in early January 2017 to complete the last stages of commissioning before commercial production begins.

Environmental groups remain skeptical of the company being able to deliver on its promises over a project they contend will ruin the landscape, put water resources in jeopardy and pose threats to wildlife.

“The announcement represents yet another example of an oil shale or tar sand project that is unable to make the finances work,” said Lesley Adams of the Waterkeeper Alliance. “Developing unconventional fuels in the Colorado River Basin would fundamentally undermine our national climate goals and threaten scarce water supplies. It is simply not a viable path toward energy independence.”

John Weisheit, of Living Rivers and the Colorado Riverkeeper, said the repeated delays at PR Spring do not bode well for its success.

"US Oil Sands has been promising immediate development with breakthrough technology for six years, and now with 98 percent of the infrastructure in place, all but essential personnel have been laid off," Weisheit said.