Oil price crash: Canada’s oil sands braces for another battle Report

Insight 16 March 2020

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Report summary

Plunging prices again endanger Canada's oil sands sector. If Brent averages US$35/bbl for 2020 we expect project owners to lose Cdn$23 billion. The sector has changed since 2015. Lessons learned from previous global and regional price shocks must be applied. Decisive action needs to be taken. This is not the death knell for oil sands, but the realities of negative cash flow must not be underestimated. Read on to see what we expect in 2020.

Executive summary
- Global and regional context
Current prices are disastrous for cash flows
- Ripple effect
Assessing 2020 project costs
- Extracting a barrel of bitumen costs Cdn$19-57/bbl
- Key to success is driving down opex costs
Comparing 2015 to 2020
- Different starting points
- Consolidation was an outcome last time, but now less likely to repeat
- Fewer investment decisions to defer
- Production levels hold firm
Long-term outlook is conditional to oil price improving
- Challenges abound
- Methodology and assumptions