Alberta’s chief energy economist says the wildfires that swept through Fort McMurray in May resulted in the loss of $1 billion in planned capital spending in the oilsands for 2016.
And Matt Foss adds while he believes those plans – mainly for expansions or enhancements of existing projects – are deferred, not cancelled, he doesn’t know when or if companies will resume their spending given benchmark oil prices that remain below break-even levels.
In a speech at a heavy oil conference in, Foss said lower costs have reduced the West Texas Intermediate price at which oilsands expansion projects make money by about $10 per barrel to US$50 to $60 per barrel, but that’s still higher than current prices in the mid-$40s.
Foss says figures provided by the oilsands companies show about $800 million scheduled to be spent in May and June did not take place due to the upheaval in workforce availability and construction logistics caused by the fire. Although little damage was done to the projects themselves, rebuilding in the city has continued to cause disruptions, he says.
Alberta oilsands production in May dropped by about one million barrels per day in May, Foss estimates, and by about 700,000 bpd in June. At full capacity, Canada’s oilsands industry produces about 2.5 million bpd.
One of Alberta’s oldest thermal oilsands projects forced to shut down during the wildfire in May has not reopened. Officials with the 17-year-old Hangingstone project operated by Japan Canada Oil Sands Ltd. say it will remain closed until benchmark oil prices improve to above US$50 per barrel.
