| | | There is no question Ft Hills cannot match the Saudi per Bbl costs which are stated at approx. $15. However neither can anyone else. Not Russia, Iran, Iraq, Qatar, The USA or any one else.
Teck committed share for 2015 is approx. $500M as they hold only 20%. The remaining 80 belongs to Suncor. Who has budgeted $1.6B for the same period.
As technology advances the Tar sands projects are becoming far more competitive than many others in the world. Suncor is still operable at $30. Ft Hills when completed is estimated at $27 production costs.
In comparison the Eagle Ford producers are struggling to bring costs down to $41 from the present break even price of $56. The Bakken Shales production costs per barrel average $61
The Saudis cannot supply the whole world. What they will do is keep the price just low enough to ensure their market share is not being undermined.
That strategy puts production from the highest cost operations around the world on hold. Including some in Canada. Like the Bakken formation which stretches from the Dakotas to southern Saskatchewan.
There is a quite a difference between oil shale. and Oil Sands One is horizontally drilled, fractured, steam or water heated for a couple of years, to get it to drain out of the rock, then pumped out and processed,
The oil Sands are open pits. Basically shovelled onto trucks and hauled in for processing.
I again admit the Saudis have cheaper production costs. But they also like money. They will not lower prices more than it takes to maintain their out put. So I suggest oil will trade $40 to $65 for the next year or two. That leaves Ft Hills still viable. And will create a long term cash flow for it's owners.
For those holding Copper Fox. Waiting for Teck. Fort Hills may be what provides the funds for development.
The oil Sands is also what most likely will supply most of America's future oil needs. |
|
