The last time Mining Engineering presented an issue with a special focus on Canadian Mining (ME, August 2008 pp. 28 to 40) things were going well. A feature story took a look at Xstrata's Nickel Rim South Mine in Sudbury and the booming Canadian oil sands were discussed at length. Potash prices were soaring, large diamonds were being found and British Columbia was launching plans to find more workers.

How things have changed in six short months.

What began as a mortgage crisis grew into a credit crisis, then mutated into a financial crisis, that has taken its toll on the value of bonds, loans, stocks, real estate and commodities.

Miners that were flying high on unprecedented commodity prices six months ago have begun scaling back with delays, shut downs and layoffs as they struggle to survive this most recent economic downturn.

Oil sands

With an estimated 175 billion barrels of oil in Alberta's oil sands, the industry was booming six months ago as oil majors such as Royal Dutch Shell and PetroCanada, along with its partners Teck Comineo and UTS Energy, worked to take advantage of fuel prices that reached $150 per barrel during the summer. Back then, it was the image of the oil sands and what production meant to the environment that was one of the biggest issues. Now, it is falling oil prices that has cooled the boom in the industry.

On Nov. 17, Petro-Canada announced that it would delay the final go-ahead for the mining portion of its planned C$21 billion Fort Hills project.

Petro-Canada is Canada's No. 4 integrated oil exploration and refining firm. It said it will not make a decision on proceeding with the mine until 2009, instead of December as initially promised, because it expected costs to decline as oil sands projects fall by the wayside.

Petro-Canada, which holds a 60-percent stake in the Fort Hills project, also confirmed it has decided to hold off building an expensive upgrader to process the 160,000 barrels a day of tar-like bitumen the mine will produce.

And Petro-Canda is not alone.

Royal Dutch Shell postponed a plan that would have nearly doubled its production from the Athabasca oil sands project north of Fort McMurray.

Suncor Energy, the second largest oil sands operator, reduced its planned capital spending for 2009 by more than a third to $4.9 billion. And Nexen Inc. and others have all rethought ambitious oil sands plans that were based on strong prices and easy credit.

"Every major oil sands participant has now put on the brakes," said William Lacey, an analyst with FirstEnergy Capital. "This is the right decision (for Petro-Canada) to go forward with.... They are living within their means."

Iris Evans, Alberta's minister of finance and enterprise, said there's no question the credit crisis and lower oil prices are hurting the province, but she's confident oil prices will head higher. A scarcity of credit has worsened the slowdown, she said, but if oil companies stop looking for more oil, it could lead to a price shock in the future.

Evans said if U.S. President-elect Barack Obama wants to reduce America's dependence on Middle East oil, he can look to Alberta. However, Obama 's top energy adviser said earlier this year that the greenhouse gas emissions from the oil sands projects are "unacceptably high" and may run counter to Obama's plan to shift the U.S. away from carbon-intensive fossil fuels.