Alberta companies at break-even point or losing money as heavy crude sinks below $24 US a barrel
A drop in Canadian oil prices this week means companies in Alberta’s oilsands are breaking even or losing money on their operations.
Currently, oilsands companies are receiving about half as much money for oil compared to elsewhere in North America. That’s making it difficult for companies to cover their production and transportation expenses.
The value of oil from Alberta has dropped by 50 per cent since June.
“At today’s prices, the typical producer is just able to cover those variable costs; many producers are above the typical level and they would be losing money for each barrel that they produce, if they are selling at the spot price today,” said Jackie Forrest, a vice-president with ARC Financial, who monitors trends in the Canadian oil and gas industry.
Companies still have other costs to cover such as royalties and debt payments.
A double whammy has driven down Canadian prices since the beginning of July: North American prices have dropped and heavy oil from Canada has fallen further because of increased supply and the closure of refineries and pipelines.
This week, BP shut down one of its refineries for heavy crude. The facility in Whiting, Ind., may need one month to repair. Meanwhile, Enbridge shut down both its Line 55 Spearhead pipeline and nearby Line 59 Flanagan South pipeline, following a crude oil leak in Missouri on Tuesday.
“You have a bunch of demand for Canadian heavy crude that is gone, but it will resolve itself,” said Martin Pelletier with TriVest Wealth, which operates a Canadian energy investment fund.
Pelletier said the markets have been in flux with “selling across the board and panic and fear.”
…click on the above link to read the rest of the article…
