Oil war

[Zephyr]

Factoring in blending and transportation, WTI equivalent costs increase to US$60.52 for SAGD and US$75.73 for a stand-alone mine. Those numbers are down 25% and 16%, respectively. The big jump in SAGD breakeven costs reflect the high price of diluent required to blend the bitumen product. Diluent (typically condensate) trades almost at par with WTI.

CERI therefore concludes that no greenfield oil sands project is economically feasible under the current pricing environment.

However, the author concedes the same could be said for any new oil development around the world, and profitability will improve considerably when (not if) oil prices eventually recover.


Those prices convert to $82.53 to $103.00 a barrel in Canadian dollars

https://www.oilsandsmagazine.com/news/2017/2/9/oil-sands-breakeven-prices-decline-since-2015

Yeah...

Except.

This is CNRL's production costs for in-situ oilsands.





Also the Trans Canada pipeline is over subscribed by 28-36% every month.

Right there is your business case for it being profitable


Any pipe to tidewater or rail line to tidewater is a license to print money

[jazz]

From oil sands magazine Factoring in blending and transportation, WTI equivalent costs increase to US$60.52 for SAGD and US$75.73 for a stand-alone mine. Those numbers are down 25% and 16%, respectively. The big jump in SAGD breakeven costs reflect the high price of diluent required to blend the bitumen product. Diluent (typically condensate) trades almost at par with WTI.

Those prices convert to $82.53 to $103.00 a barrel in Canadian dollars Reply With Quote

You are looking at the numbers wrong. That would be the cost if just some random dude decided to start an oil sands mine from scratch.

These companies have a blended cost of operations just like you do with your first quarter of land vs your last quarter and the all in development costs for many of AB producers are in the $30 USD a bbl range.

From yesterdays NP:

On average, Canadian producers break even pumping oil if the price of a West Texas barrel is somewhere in the high-US$30 range. But that’s an average break-even threshold for an industry with a wide variation in costs; that means at that level about half the companies can’t pay their bills and half are treading water.

You do know that there are literally thousands of individual wells all over Ab and Sk that their production costs would be just about zero? Many have been pumping for 40 yrs. Sunk costs recovered many times over. Gets a workover every decade and a daily visit from a company employee and that's about it.

Either way, govts nor private citizens should be telling anyone what the economics of their venture are. TMX project was 4.5B when they walked. Govt had to buy it and the old pipeline which brought the cost to $7.5B, delays, court challenges added another $2B and the pure incompetence of Trudeau brought the total cost to $12B now. Don't blame the private sector.

[chuckChuck]

What's the per barrel cost of new open pit mines in the oil sands?

Integrated oil companies that refine have been doing quite well during the downturn in prices and did not support the production cuts.

But at these prices all bets are off the table.

I bet Albertans and Kenney wish they had a few hundred billions in their heritage fund and a more diverse economy. All that incredible wealth of resources and they can't balance the books when oil prices come down from their peak. Norway is looking pretty good right now.

Even Saudi Arabia has been planning to diversify away from oil over the next decades.

[flea beetle]

What's the per barrel cost of new open pit mines in the oil sands?

Integrated oil companies that refine have been doing quite well during the downturn in prices and did not support the production cuts.

But at these prices all bets are off the table.

I bet Albertans and Kenney wish they had a few hundred billions in their heritage fund and a more diverse economy. All that incredible wealth of resources and they can't balance the books when oil prices come down from their peak. Norway is looking pretty good right now.

Even Saudi Arabia has been planning to diversify away from oil over the next decades.

I bet Norway doesn't have an equalization scheme where the lazy and corrupt part of the nation is given billions while the productive part of the nation flips the bill for said equalization. Had Alberta been able to keep the profits at home, I bet there would be a multi billion $ heritage fund. Instead Quebec gets to say they have a balanced budget because of the handout, and look down their nose at Alberta.

[blackpowder]

We are guilty of poor planning. But Norway comparisons are getting old and are stupid.

[Integrity_Farmer]

Yes some people are in denial but here is an article from the Financial Post October 2018 when west Texas crude was over $70 a barrel

Oilsands bitumen prices are actually in negative territory for the first time ever, analyst says

A financial analyst says prices being paid for Western Canadian oilsands bitumen have fallen so far that producers are losing money on every barrel sold

“It’s not the actual realizations these producers are getting … you’re losing money before you even produce that barrel at current differential levels.”Condensate, a type of light oil often used to dilute bitumen, was selling for about US$63 per barrel in Edmonton on Thursday, which means the bitumen part of a WCS barrel composed of 30 to 40 per cent diluent was actually fetching between negative 11 cents US and negative 28 cents US per barrel, he said.


https://business.financialpost.com/commodities/energy/oilands-bitumen-prices-are-actually-in-negative-territory-analyst-calculates

[TASFarms]

Yes some people are in denial but here is an article from the Financial Post October 2018 when west Texas crude was over $70 a barrel

Oilsands bitumen prices are actually in negative territory for the first time ever, analyst says

A financial analyst says prices being paid for Western Canadian oilsands bitumen have fallen so far that producers are losing money on every barrel sold

“It’s not the actual realizations these producers are getting … you’re losing money before you even produce that barrel at current differential levels.”Condensate, a type of light oil often used to dilute bitumen, was selling for about US$63 per barrel in Edmonton on Thursday, which means the bitumen part of a WCS barrel composed of 30 to 40 per cent diluent was actually fetching between negative 11 cents US and negative 28 cents US per barrel, he said.


https://business.financialpost.com/commodities/energy/oilands-bitumen-prices-are-actually-in-negative-territory-analyst-calculates

Do you know what Condensate is?

[macdon02]

Likely looking at a May low here, no rush to book fuel.

If you guys aren't gonna talk about the 3-2-1 crack spread you have no business talking economics of refining or what's feasible as far as crude. Talk to someone at the hedge desk if you want to know. I don't. Never bet against someone that can thread a needle from 3 miles away.

[oneoff]

"On the contrary. Just because its cheaper doesn't mean I will use more. I am committed to reducing use as much as possible. Lower priced inputs mean higher profits for the farmer. Are you in favour of higher fuel prices and giving more of your profit to the oil companies? Quote

When we miss some of the details of the "big picture"; we don't always see clearly; or maybe it clouds one's perspective.

Apparently you can be in favor of accepting new surface leases at the same time biting the hand of those bad oil companies who you might claim are sustained by government "subsidies".

It's all in how you develop those opinions and rationalize your behavior.

[Oliver88]

Yes, thinking we might have jumped the gun filling the storage tanks. Rack price down 10 cents since then
Oh well...

Diesel fuel price down 13 cents in 2 weeks.