Canadian oil sands to continue growth, according to IHS


For the past decade, Canada has been the third largest source of oil supply growth in the world— growing from 2.4 million barrels per day in 2005 to 3.7 million barrels per day in 2014.  Canadian oil production gains have come mainly from growth in the Canadian oil sands. However, with oil prices languishing at much lower levels than those of recent years, the economics of medium to higher-cost supply, including the Canadian oil sands, have come under increasing scrutiny.  

Yet, IHS expects growth to continue.

Despite lower oil prices, oil sands projects that are already up and running are expected to continue to operate.  Through the worst of the low prices over the first quarter of 2015, existing oil sands projects should have been able to cover their operating (or cash) costs.  IHS estimates that on an operating (or cash) cost basis existing mining and steam-assisted gravity drainage (SAGD) in situ facilities would have required on average a WTI price of about $30 per barrel and $40/bbl, respectively. It should be noted these values are estimates and considerable variability exists in the economics of specific projects.  Also costs are falling in 2015 compared to 2014 because of the lower cost environment which will alter the breakeven thresholds.
(by Kevin Birn, IHS)