Petro-Canada is laying off 200 people in its oilsands division, most of them related to the company's stalled Fort Hills project.

The Calgary-based company said the layoffs have nothing to do with its merger with energy giant Suncor last month.

"This was a tough decision that we were probably going to have to make in oilsands with or without the merger," said Petro-Canada spokeswoman Kelli Stevens. "We're in a situation where we have more people than we have work for them to do."

Stevens said it's a challenging time to be in the energy industry.

"It's been really difficult to see how things have changed," she said. "I mean, even a year ago or less, we were trying to hire as many qualified people from everywhere we could get them from, and the gears have really switched, and it's been hard on all of us."

The layoff notices to the 200 people in Calgary and Fort McMurray will be handed out over the next few days.

Costs for the Fort Hills project, which includes a mine north of Fort McMurray as well as an upgrader in Sturgeon County, have skyrocketed to more than $21 billion, 50 per cent more than the original $14.1 billion price tag that was estimated in June 2007.