Canada’s tar sands/oil sands producers will lose $23 billion in cash flow over the next two years due to low oil prices, but an analysis by global energy consultancy Wood Mackenzie found that will have no impact on output from existing projects.
Principal Analyst Callan McMahon told the Herald that 32 projects will lose 62% of their cash flow if benchmark West Texas Intermediate (WTI) crude oil averages $55 per barrel in 2015 and $65 in 2016. But “even if projects temporarily operate at a loss, shut-ins are not expected, and with the costs sunk, projects totalling 458,000 barrels per day of bitumen are set to start production in 2015-16,” he said in a release.
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As of Thursday evening, WTI was trading at $48.17 per barrel, and oil-price.net was posting a one-year forecast of $55.
“If oil prices were to stay lower longer, could they postpone those decisions further and push that capex out in the future more? Sure,” McMahon said. “On the flip side, I’d point out that if oil prices bounce back, they could also bring capital forward.”
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