(In Oct 27 item, corrects C$ to US$ in ninth paragraph)
CALGARY, Alberta, Oct 27 (Reuters) - Royal Dutch Shell Plc will not continue construction of its 80,000 barrel perday Carmon Creek thermal oil sands project in northern Albertabecause of the lack of infrastructure to move Canadian crude tomarket, the company said on Tuesday.
Shell said the decision to halt the project was also theresult of "current uncertainties" and chief executive Ben vanBeurden said the company was having to manage costs in today'slow oil price environment.
"We are making changes to Shell's portfolio mix by reviewingour longer-term upstream options world-wide, and managingaffordability and exposure in the current world of lower oilprices. This is forcing tough choices at Shell," van Beurdensaid in a statement.
Canada's oil sands hold the world's third largest crudereserves but carry some of the highest project breakeven costsglobally. Western Canada also struggles with market accessissues due to limited export pipelines, which can lead to a glutof crude building up in Alberta and weighing on prices.
The plunge in benchmark oil prices has prompted a number ofcompanies to defer costly new oil sands projects, although sofar few have been cancelled outright once underway.
Shell originally sanctioned the Carmon Creek in October 2013but said in March that it would be delayed by two years as thecompany retendered some contracts and adjusted the design totake advantage of lower costs during the market downturn.
On Tuesday the company said following a review of potentialdesign options, updated costs, and capital priorities, it haddecided the project did not rank in its portfolio at this time.
Shell, which owns 100 percent of Carmon Creek, will retainthe leases and preserve some equipment while continuing to studyoptions for the project.
The company expects to take net impairment, contractprovision, and redundancy and restructuring charges of around $2billion as a result of the decision.
Last month Shell also pulled the plug on its plans to drillfor oil in the Arctic, citing high costs and disappointing wellresults and in February shelved plans for its 200,000 bpd PierreRiver oil sands mining project. (Reporting by Nia Williams)