Tar Sands/Oil Sands Execs Foresee No New Projects While Prices Stay Low
Canada’s tar sands/oil sands industry won’t be considering any new development projects as long as oil prices remain mired in the US$45 to $55 per barrel range, four fossil executives confirmed this week during a panel discussion at the annual TD Securities oil and gas conference in Calgary.
Among the panelists from Suncor Energy, Cenovus Energy, Husky Energy, and Canadian Natural Resources Ltd., “there was some talk of brownfield developments, de-bottlenecking work, and restarting projects deferred after world oil prices crashed three years ago,” JWN Energy reports. But “none of the four executives…predicted greenfield oilsands projects will get the go-ahead anytime soon.”
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“I think we will see a concentration on some brownfield, high-return projects, some de-bottlenecking—and in our case with the Syncrude project—some synergy projects,” said Suncor Executive Vice President Steve Reynish, but “I think we will see less greenfield sanctioned” through the end of this decade.
“He added that the next wave of greenfield oilsands projects will likely be in situ rather than mining and will likely proceed in the 2020s,” JWN notes. But for now, the operating philosophy is to “stick to what you’re good at. Make sure you can produce cash even at these oil prices. And then be very selective with your investments going forward. Short term: probably brownfield. Greenfield: yet to be determined, but it’s some way off in the future.”
The panel spotlighted the extent to which tar sands/oil sands producers are depending on the next generation solvent-assisted extraction methods to allow them to continue their operations at lower cost. Reynish said the techniques would reduce “facility footprints” 45% compared to existing thermal oil facilities, require 15% less equipment, cut the number of valves on a well pad from 230 to 30, and reduce construction hours from 7,000 to 3,000.
“I give you that level of detail just to give you a flavour for some of the kind of dramatic changes that we think are possible—and, quite frankly, required—to get to the level of capital intensity that would justify new projects in this volatile oil price world,” he told conference participants.