The multi-billion dollar bitumen upgrader approved in September for the so-called "upgrader alley" area northeast of Edmonton is no longer going ahead.
Instead, project proponent Total E&P Canada announced Friday it would join with Suncor Canada to resume construction on the Voyageur upgrader near Fort McMurray, Alta. The Voyageur project was put on hold two years ago because of the economic downturn.
"It is going to be synergetic because this upgrader is going to be fed by two mines," said Total E&P president and CEO Jean Michel Gires.
"You know most of the upgraders up to now were just fed by one single mine. It is going to be shared between two major companies and obviously we can share the risk."
Under the deal announced Friday, Total will contribute $1.75 billion to Suncor. Total will expand ownership in Suncor's Fort Hills project to 39.2 per cent and get 49 per cent of the Voyageur project.
Suncor will now have a 36.75 per cent of Total's stake in the proposed Joslyn mine. The Voyageur upgrader would process Total's bitumen from both mines.
News the Total project is not going ahead came as a disappointment to Neil Shelly, executive director of the Industrial Heartland Association, a group formed to promote upgrader alley.
"What we're seeing is sort of a readjustment of what we can expect around this area," he said.
Back in 2007, seven major projects were announced for the area. Today, Shelly said it's likely only one or two projects will go ahead over the next decade.
But he said the Suncor-Total alliance is good for the province as a whole.
"By having these two companies join together, at least we get the Voyageur upgrader in the Municipality of Wood Buffalo underway, which means we'll have more value added and economic activity here in Alberta," he said.
Local landowner Ann Brown was thrilled to learn the Total project has been shelved.
"It's a great Christmas present," she said.
Brown and other local residents held protests against the Total upgrader outside hearings held by Alberta Energy Resources Conservation Board at a Fort Saskatchewan hotel in June.
Armed Alberta sheriffs were sent to watch the hearings and private security guards hired by Total videotaped the protesters. The province later pulled the sheriffs.
Total officials said the videos were made without the company's knowledge and the guards were asked to stop.
Brown wonders worries what might end up on the land, which is still owned by Total.
"There's always that apprehension of, OK, what's next?"
Total's CEO Gires said the company spent millions on plans for the upgrader, but he doesn't know what the company will do with the land.