Posted on 03/02/2017 7:34:37 AM PST by Lorianne
Canada’s oil sands could struggle to rebound, with potentially billions of barrels of oil being kept underground permanently.
Canada’s oil sands are incredibly expensive, some of the costliest sources of oil in the world. Unlike conventional oil drilling, or even drilling in shale, producing from oil sands is more like open-pit mining in many cases. The oil, often found as a sticky, viscous semi-solid known as bitumen, requires extra steps to extract and process before it can be shipped. That stands in stark contrast to conventional oil, which merely requires drilling into an oil field and pumping out the crude.
As a result, the breakeven cost for Canada’s oil sands is dramatically higher than most other places in the world. Obviously, costs vary from company to company and project to project, but a 2016 estimate from IHS put the average breakeven price at a new greenfield oil sands mine at between $85 and $95 per barrel. A steam-assisted gravity drainage (SAGD) project could cost between $55 and $65 per barrel just to break even. With those figures, it is easy to see why very few, if any, greenfield projects could move forward in the near- to medium-term, particularly when companies could look elsewhere for oil.
(Excerpt) Read more at oilprice.com ...
Trudeau is distrusted by the majors.
Trump is offering them a much higher returm on their investment.
Trudeau cannot compete. And that will be his downfall.
Canadians now see Trudeau as a psychopomp, a dimmi and a short timer who has no inclination to unify Canada’s economy.Trudeau makes a good cartoon figure, until no one is laughing any longer.
My premier, the biatch, Notley made it all but impossible for the oil producers to think they had a stable provincial regime to deal with. So they have stopped almost all exploration and are just producing from what they’ve already established.
Klein, bless his heart, was able to work with the major oil producers in the 90’s, when oil went as lost as $10/barrel. But Notley can’t make it work at $50/barrel.
Fake news. Someone doesn’t want that pipeline built.
Two of the three were approved by the Trudeau government. The one that didn't get approved was the Enbridge Transmountain line from Alberta to the Pacific coast of British Columbia.
I didn't read the full article, but I wonder if the author addresses the issue of U.S./Canada exchange rates. Oil is sold on a global spot market and priced in U.S. dollars, but with the Canadian dollar weakening in recent years it actually costs less to extract it in Canada today than it did five years ago.
The intent is to keep it in the ground, until the majors give it up. Then Notley can sell it to whichever elite owns whatever oil company that ends up owning the leases.
I have not found “Oilprice” to be a very informative or reliable source.
A solution to the oil sands extraction problem in Canada would be to site a nuclear-electric plant on the oil sand and use the waste heat to heat the sand to extract the oil.
Probably won’t happen until Canada decides they need the money or the energy. Certainly not while Trudeau is PM.
The oil will not remain the ground “permanently.” Some day it will be extracted. The only issue is whether that day is today or some unspecified future time.
And those oil companies are not giving up their mineral rights. They are patient; they can wait a generation or two if necessary. I’m reminded of the Mexican nationalization of oil reserves in 1940. For years, there was no extraction of them, until the 1980s when Mexico “discovered” vast quantities of oil. The American companies knew where it was all along; Mexico didn’t nationalize the research that sat in the offices of Standard Oil for all those years.
And when it came time for PEMEX to extract it, they had to use the expertise of the American companies anyway.
No need to even analyze it to that extent.
The math is pretty simple.
Oil Sands oil is the most expensive and difficult to extract of any source on the planet. If prices are not high enough to make it worth their while they are going to leave it where it lies.
All it takes is one mid east war and the headlines about a Canadian oil boom will come back.
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