Seeking Alpha

Canada oil sands projects are biggest losers from low crude price, study says

  • ConocoPhillips (NYSE:COP) and Royal Dutch Shell (RDS.A, RDS.B) are among global oil companies needing crude prices in excess of $150/bbl to turn a profit from Canada’s oil sands, according to a study from a London-based environmental advocacy group.
  • The projects most at-risk from lower prices are COP's Foster Creek and Shell’s Carmon Creek oil sands developments in Alberta that respectively need $159/bbl and $157/bbl oil to be profitable, Carbon Tracker says.
  • The joint COP-Total (NYSE:TOT) Surmont oil sands project requires $156/bbl, while Exxon Mobil's (NYSE:XOM) Aspen and Kearl developments in the same part of Canada need $147 and $134 crude, respectively, to make economic sense, the study finds.
Comments (31)
  • fleagle
    , contributor
    Comments (113) | Send Message
     
    Note that study is from a "London-based environmental advocacy group." Obviously this group is not biased. Enough said.
    15 Aug, 12:49 PM Reply Like
  • Bob Carl
    , contributor
    Comments (196) | Send Message
     
    I would discount this source. It is an environmental group. One wonders what their cost methodology is. They are probably factoring in carbon capture costs, damage to the immediate environment, etc.
    15 Aug, 12:50 PM Reply Like
  • Tueffelhund85
    , contributor
    Comments (123) | Send Message
     
    No Bob, totally discount any study done by rabid environmentalists. They do tend to LIE....
    15 Aug, 01:28 PM Reply Like
  • wigit5
    , contributor
    Comments (3981) | Send Message
     
    I wouldn't completely discount the review but the $$ amount is certainly bogus. Why would any company start a project that far away from breakeven.
    15 Aug, 12:59 PM Reply Like
  • Tueffelhund85
    , contributor
    Comments (123) | Send Message
     
    Wigit, you wouldn't totally discount the study but have you read it? I'd bet you haven't. But don't discount it even after it lied on costs. LOL
    15 Aug, 01:30 PM Reply Like
  • Matthew Brown
    , contributor
    Comments (515) | Send Message
     
    Obviously a ridiculous "study".
    Breakeven for SU on a similar oil sands development was @ $36 last quarterly report.

     

    It amazes me this type of stuff gets picked up and treated with 'respect'.
    Put "study" in the new release and everyone picks it up verbatim.
    15 Aug, 01:07 PM Reply Like
  • rvshaw
    , contributor
    Comments (90) | Send Message
     
    So, we are now supposed to read financial analysis based on the ability of leftist environmentalists (who can't run a Koolaid stand) to calculate such numbers as break even points, full cost, profits, etc. That is laughable.
    15 Aug, 01:20 PM Reply Like
  • cannedpawn8
    , contributor
    Comments (191) | Send Message
     
    Specially, red Kookaid. very bad for you.
    16 Aug, 05:22 AM Reply Like
  • Jmsgryn
    , contributor
    Comment (1) | Send Message
     
    Why would anyone believe an environmental advocacy group on the question of economics of different fuel sources? Why does Seeking Alpha report on it?
    15 Aug, 01:35 PM Reply Like
  • King Rat
    , contributor
    Comments (603) | Send Message
     
    In many regards I consider myself an environmentally concerned individual. To that extent I have a lot of concerns about the environmental impact of oil sands projects. That would be no excuse to fabricate lies about the industry.

     

    We can assume that the environmentalist groups are attempting to work against the oil companies. If we do make that assumption then we either enjoy or suffer the irony that these environmentalist groups' grandiose claims acclimate the public to higher oil prices thus enriching the very oil companies the environmentalist groups claim to work against.

     

    (what goes around comes around)
    15 Aug, 01:44 PM Reply Like
  • retired358
    , contributor
    Comments (110) | Send Message
     
    There is no question that Canadian oil sands projects benefit from increased crude prices. However, there is no way that the "profitable" crude prices mentioned in the article/study are correct.

     

    The projects are now profitable at current crude prices - at least according to the companies involved. And, since they would be in trouble publishing incorrect information, I know who I would believe.

     

    And, the author(s) of this article are to be faulted if they repeat the information from the "study" without verification - at a minimum (and assuming they are too lazy to verify), they should at least reference the article so that readers can verify if desired.
    15 Aug, 01:47 PM Reply Like
  • ljames2
    , contributor
    Comments (17) | Send Message
     
    1. Alberta oil sands projects have the highest break-even costs of any unconventional petroleum operations.

     

    2. One theme that I have seen in the literature is the higher cost for projects still under development. While many current projects can make a go of it, the development of future projects is apparently much more in doubt.

     

    3. In a Canadian government report just published, concern is mounting about air quality in the area, and the ring of mercury on the ground; = more cost.
    15 Aug, 02:04 PM Reply Like
  • ljames2
    , contributor
    Comments (17) | Send Message
     
    --Just came upon this report, about rising project cost, relative to possible falling market price of oil:

     

    EY concludes that the industry can no longer rely on oil and gas price increases which, in the past, have masked many of the consequences of megaproject overruns.
    "Unconventional discoveries have already had an impact on the economic viability of many megaprojects," Preiss said, "and securing capital is only going to become more difficult unless companies are able to consistently deliver on deadline and within budget."

     

    http://bit.ly/1oB9L65

     

    Alberta tar sands is one of the types of megaprojects listed in the report.
    15 Aug, 02:30 PM Reply Like
  • Tueffelhund85
    , contributor
    Comments (123) | Send Message
     
    What are tar sands?
    15 Aug, 03:49 PM Reply Like
  • ljames2
    , contributor
    Comments (17) | Send Message
     
    Tar Sand Definition
    dictionary.search.yaho...
    n. noun
    A type of oil sand from which the lighter fractions of petroleum have escaped and in which only the heavier fractions forming a residual asphalt remain.
    15 Aug, 06:34 PM Reply Like
  • john001
    , contributor
    Comments (578) | Send Message
     
    actually the term "Tarsands" is used today by the eco-freaks and their ilk as a back-hand slap at the oilsands industry in Canada. The term is now completely detached form any geological meaning.
    15 Aug, 09:29 PM Reply Like
  • john001
    , contributor
    Comments (578) | Send Message
     
    ......" according to a study from a London-based environmental advocacy group.". Right.......and no doubt sponsored by the Saudi's and their OPEC cohorts.
    15 Aug, 02:13 PM Reply Like
  • Veritas1010
    , contributor
    Comments (1352) | Send Message
     
    Once again, poppycock and rubbish.

     

    It is truly unfortunate that man's well intention ideas turn into totalitarian statism, and just another level to impoverish industry and the working class, ("us" the middle-class or what's left of us, if not, then maybe just myself I suppose).

     

    I remember personally the birth of the EPA under the Nixon administration, it seemed an incongruity at the time to think of the then Nixon Republicans considering one whit about environmental stewardship. As it turned out however the fears I surely embraced at that time never materialized, instead generations of learned individuals will accept unthinking government doggerel and become "green Nazi's", (I loath associating anyone or thing to these poor excuse for humans on their worse days, but when you endeavor to rob freedom, dignity and mutual respect then an analogous association is, possibly apropos, especially if you strap on the use of propaganda and violence).

     

    I would take this European "study" with a huge grain of salt. Are oil sands a mess - naturally - yes they are, it doesn't help however that it was nature that caused this massive oil spill geologically to start with! Let's cool the hype and try to stick with science in this case for reasonable answers and concerns.

     

    disc.: long, COP, COSW.
    15 Aug, 02:20 PM Reply Like
  • kevcl6750
    , contributor
    Comments (41) | Send Message
     
    How did this nonsense end up on SA ?
    15 Aug, 03:49 PM Reply Like
  • cfg3450
    , contributor
    Comments (84) | Send Message
     
    London-based environmental advocacy group,
    is nothing more that another "Back Yard Socialism " group
    spreading their ware of lies....
    15 Aug, 04:40 PM Reply Like
  • cannedpawn8
    , contributor
    Comments (191) | Send Message
     
    You can be that COP will shut down ops if oil gets too low.
    16 Aug, 05:25 AM Reply Like
  • ptmmac
    , contributor
    Comments (104) | Send Message
     
    The comments on here are pretty one sided. I would agree that the idea's behind this study are not encapsulated in the headline. The environmental argument is probably based upon adding costs for cleaning up the mess left behind by the oil sands development. There definitely have been large companies who have been bankrupted for ignoring the dangers of the chemical waste they produce.

     

    The real problem is that no one knows how much that clean up would cost and any study that claims to have that information is propaganda. Not to put a fine line on it but you can't "make the world a better place" by using such methods and expect to garner very much respect for what you are doing.
    17 Aug, 09:26 AM Reply Like
  • john001
    , contributor
    Comments (578) | Send Message
     
    "The real problem is that no one knows how much that clean up would cost and any study that claims to have that information is propaganda." Actually, land reclamation is an integral and ongoing part of the oil sands development. So, yes, the cost is well known.
    17 Aug, 09:31 PM Reply Like
  • Matthew Brown
    , contributor
    Comments (515) | Send Message
     
    Exactly John. All surface oil sands miners, have to return the land to original state. This is not a new requirement, this goes back decades.
    People need to read up if they want to be taken seriously.

     

    (it's actually better than original state as nature's oil spill will have been cleaned up)
    18 Aug, 06:02 PM Reply Like
  • Tueffelhund85
    , contributor
    Comments (123) | Send Message
     
    From Forbes

     

    The week also saw the release of two new faulty studies, one predictably bashing Keystone XL, and another falsely accusing oil and gas operators of continuing to use diesel in hydraulic fracturing operations. Both were quickly debunked. To top everything off, former president Jimmy Carter, whose failed energy policies from more than three decades ago still haunt the U.S. and global economies, put the final nail in the coffin of a carbon tax by formally endorsing the concept.
    17 Aug, 01:43 PM Reply Like
  • DonSimon
    , contributor
    Comments (76) | Send Message
     
    The figure us around $80/barrel
    The "study" shows how low the "environmentalists" will go! Fabricating such erroneous figures.
    19 Aug, 03:08 AM Reply Like
  • crazty4tennis
    , contributor
    Comments (510) | Send Message
     
    I believe we should all be conscious about our environment.
    19 Aug, 09:13 AM Reply Like
  • john001
    , contributor
    Comments (578) | Send Message
     
    the only people I know who aren't "conscious about our environment" are called "deceased".
    19 Aug, 11:10 AM Reply Like
  • DonSimon
    , contributor
    Comments (76) | Send Message
     
    I am an environmentalist myself. But unfortunately there are fanatical "environmentalist' who too often spin facts to further their cause. Those do more damage to being a responsible environmentalist.
    20 Aug, 07:52 AM Reply Like
  • Matthew Brown
    , contributor
    Comments (515) | Send Message
     
    Agree. the name is tainted now. I use conservationist instead.
    20 Aug, 08:02 AM Reply Like
  • mountaintop
    , contributor
    Comments (36) | Send Message
     
    When natures gigantic oil spill is cleaned up at a benefit to mankind the socialist agenda driven engineers have programmed environmental sheepel retards sucking down coolaid to believe 180 degrees from the truth. Best part about seeking alpha is that to make money the truth has to be found and false propaganda does not get much traction here.
    24 Aug, 11:28 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector

Next headline on your portfolio:

|