Doubts are surfacing over the future of BP's £5.8 billion project to squeeze crude from the oil-rich sands of northern Canada after one of the chiefs of Husky Energy, its joint-venture partner, resigned unexpectedly.

Catherine Hughes, vice-president of oil sands for Husky, based in Calgary, left the company last week amid speculation that the project may be delayed after a collapse in the price of oil.

A string of oil-sands projects, which depend on prices of as much as $70 a barrel to remain economic, have been scrapped or delayed in recent months as crude oil prices have plummeted, from highs of more than $147 last July to lows of less than $40 this month.

The economic squeeze on the high-cost business of mining bitumen comes as the oil majors prepare to announce big declines in profits for the final quarter of 2008 because of the falling price of crude.

Ms Hughes's resignation, which came after a decision by Husky to merge its oil sands business with its heavy oil business, comes as the joint venture prepares to decide whether to proceed with the £5.8 billion Sunrise project in Alberta. BP formed the venture with Husky in December 2007, when oil was trading just below $100 a barrel.

A spokesman for Husky said: “Ms Hughes decided to leave the company of her own accord and pursue other options.”

The company said that it was continuing to work towards “optimising” the Sunrise project. A spokesman for BP said that the company was “confident in the future of the Sunrise project and was still working to bring it to fruition”.

Up to 175 billion barrels of oil are contained in the sands of the Athabasca region, making Canada second only to Saudi Arabia in a ranking of countries' proven oil reserves.

However, extracting crude from sand, either by mining or injecting steam to recover it in situ, is expensive and environmentally controversial, requiring the use of huge amounts of energy and water. The cost of production, at $30 to $40 a barrel, compares with as little as $5 a barrel at some of the largest onshore oilfields in the Middle East.

The nine billion-barrel Sunrise project was scheduled to start in 2012 as an integrated production and marketing operation. BP and Husky planned to use a technology that used a steam-assisted gravity drainage project, whereby steam is pumped underground to loosen up tar-bitumen in the oil sands so that it can be pumped to the surface in wells.

Further details of the future of the project are likely to emerge when BP unveils its final results on February 3.

The plight of Alberta's oil-sands mining industry was highlighted last week when Suncor, the second-largest investor, announced its first quarterly net loss and said that it would cut spending for the second time since October. Suncor has suspended investment on a C$20 billion (£11.9billion) expansion project and has cut spending for 2009 from C$10 billion to C$3 billion.

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