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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 375.93-1.8%Nov 14 4:00 PM EST
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To: Wyätt Gwyön who wrote (6774)5/25/2006 5:53:11 PM
From: Elroy Jetson  Read Replies (2) of 217768
 
The "net back" listed in the Syncrude Sustainability report is roughly consistent with my numbers.

sustainability.syncrude.ca

They may very well hope to bring down their cost of bitumen production from $28 per barrel to $20 per barrel, but I don't believe that estimate actually includes all costs. They could impress me by showing how that is done - probably by excluding restoration costs of the mine area and forgetting about a lot of their past capital costs. Based on Book Value, the output from Chevron's Richmond Refinery is almost all profit - but that has nothing to do with the actual economics of the refinery.

Whether the bitumen price is $20 or $28 per barrel, tar sand Bitumen is not light crude oil. So we cannot compare the price of light crude to Bitumen and walk away with any information, unless we know how much it costs to convert bitumen into light crude, or unless we know the discount which bitumen yields on the open market.

Based on the hydrogen component, a barrel of Bitumen is worth 0.69 barrels of light crude - minus the conversion costs. Based on this ratio, $20 Bitumen costs are break-even at $29 per barrel and $28 Bitumen cost is break-even at $40.50 light crude.

Perhaps you know the actual market price of Tar Sand Bitumen.
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