Insight
Oil price crash: Canada’s oil sands braces for another battle
*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
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.
Table of contents
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Executive summary
- Global and regional context
-
Current prices are disastrous for cash flows
- Ripple effect
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Assessing 2020 project costs
- Extracting a barrel of bitumen costs Cdn$19-57/bbl
- Key to success is driving down opex costs
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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
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Long-term outlook is conditional to oil price improving
- Challenges abound
- Methodology and assumptions
Tables and charts
This report includes the following images and tables:
- Oil sands cash flow by project type
- 2020 post-tax cash flow by project
- Remaining post-tax PV10 by project type and scenario
- Royalties in 2019-2021 by scenario
- Cash cost of extracting bitumen in 2020 relative to price
- Average operating costs for reporting projects
- Selected SAGD project operating cost trends
What's included
This report contains:
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