Development Cost Issues

Worldwide there is extreme cost inflation to undertake energy projects. Increased costs in Alberta were not entirely due to the unprecidented activity levels.

A good example of capital cost inflation is quoted below:

Total Says "Huge Cost Issues" On Iran LNG Project

Dubai (Reuters) - France's Total said Tuesday it is facing "huge cost issues" on its Iran liquefied natural gas project and is reviewing plans with the Iranian government.

"We are restudying the project. We are facing huge cost issues," Philippe Boisseau, president of gas and power at Total, told Reuters. "We are reviewing the project with the Iranian government and it could take some time."

He declined to give an estimate on the latest cost of the project or say when Total might make an investment decision.

Note an additional point of interest is that the LNG that is projected to crush the domestic North American gas markets will be high cost developments.