Total E&P Canada is putting its Joslyn oilsands project outside Fort McMurray, Alta., on hold indefinitely, meaning about 150 workers will be laid off.
Total E&P CEO Andre Goffart said the company had been unable to find a formula under which the economics of the $11-billion project would work, he said.
"We have worked since 2011 on the engineering preparation for the Joslyn North mine with a view to improve and reduce the cost of the project to prepare for sanction," he said in a conference call with reporters.
"We ... got some positive results but unfortunately the cost reductions are not yet sufficient to support, to have sufficient economics to support final investment decision."
Just six months ago, Total E&P, a unit of France's Total S.A., was talking about increasing its investment in the Joslyn oilsands and hoping for an output of between 150,000 and 160,000 barrels a day.
It had said a decision on Joslyn, about 65 km northwest of Fort McMurray, would not come until 2015. The Joslyn project is a venture with Suncor Energy Inc, Occidental Petroleum and Inpex Canada, which all agreed to put it on ice.
At the same time, Total is developing Fort Hills, a $13.5-billion joint venture with Suncor Energy Inc. and Teck Resources Ltd.
Goffart said the 150 jobs will be cut by the end of this year, but some of those workers may be moved to other parts of the company.
Bottlenecks in getting Western Canada Select to market because of a lack of pipeline capacity mean the oil sells at a discount to Brent crude.