Record low prices for oilsands crude could result up to 20 per cent of Canada’s thermal bitumen production being shut down over the next few months, according to analyst Matt Murphy of Tudor Pickering Holt & Co.
That would equate to about 340,000 barrels per day of the 1.7 million bpd produced by projects that use steam to loosen the heavy, sticky oil and allow it to be pumped from wells in northern Alberta, he said.
“It’s certainly a tough time for Western Canada producers right now,” said Murphy.
Western Canadian Select oil, bitumen blended with lighter oils to allow it to flow in a pipeline, fell to a record low of US$4.58 per barrel on Friday morning as New York-traded West Texas Intermediate dropped to US$21.55.
After removing the cost of blending, Murphy estimates the price that flows through to the producer is about 83 cents per barrel, a level at which no producer can be profitable.
Dan Healing – Canadian Press – March 27, 2020.
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