International oil companies have been backing off growth plans in Canada’s oil sands.
Shell and Marathon have agreed to sell most of their oil sands operations. ExxonMobil recently removed 3.5 billion bbl of the ultraheavy crude from its proved reserves because it no longer plans to develop them any time soon, following a similar move by ConocoPhillips.
In a world with a surplus of oil production options, the oil sands suffers because the cost of development is high and the value of ultraheavy crude is low, with oil sands bitumen selling for USD 15/bbl less than the benchmark for light crude, and these projects require big financial commitments stretching out for decades.
“They (oil sands) are the most expensive kid on the block and that is not a good place to be,” said Ron Sawatzky, a principal researcher for InnoTech Alberta, and chair of the SPE Canada Heavy Oil Technical Conference. “US shale producers are the biggest competitors for oil sands. We cannot match the nimbleness of those guys.”
Among those competitors are ExxonMobil and ConocoPhillips, with large operations in unconventional plays in the US and Canada and significant oil sands operations....
The Future of the Oil Sands Depends on One Thing: Totally Rethinking Everything
Stephen Rassenfoss, JPT Emerging Technology Senior Editor
01 April 2017