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Originally Posted by Brewmaster
From the reports I've read, oil sands production is unlikely to see shut-ins unless WTI gets to the low $20's and stays there. Based on the average variable costs, mining projects will continue down below $10/bbl and SAGD projects could see shut-ins in the $20-30/bbl range. This is all for existing production where the fixed capital has largely been spent.
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With heavy oil and bitumen there is talk that some producers are getting less than $10 us per barrel in Alberta. That is nowhere close to break even price levels.
Here is an article about the US patch. This may not be far off in Alberta.
http://www.bloomberg.com/news/articl...s-than-nothing
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January 18, 2016 — 1:28 AM MST Updated on January 18, 2016 — 3:01 PM MST
Oil is so plentiful and cheap in the U.S. that at least one buyer says it would pay almost nothing to take a certain type of low-quality crude.
Flint Hills Resources LLC, the refining arm of billionaire brothers Charles and David Koch’s industrial empire, said it offered to pay $1.50 a barrel Friday for North Dakota Sour, a high-sulfur grade of crude, according to a corrected list of prices posted on its website Monday. It had previously posted a price of -$0.50. The crude is down from $13.50 a barrel a year ago and $47.60 in January 2014.
While the near-zero price is due to the lack of pipeline capacity for a particular variety of ultra low quality crude, it underscores how dire things are in the U.S. oil patch. U.S. benchmark oil prices have collapsed more than 70 percent in the past 18 months and fell below $30 a barrel for the first time in 12 years last week. West Texas Intermediate traded as low as $28.36 in New York. Brent, the international benchmark, settled at $28.55 in London.
“Telling producers that they have to pay you to take away their oil certainly gives the producers a whole bunch of incentive to shut in their wells,” Andy Lipow, president of Lipow Oil Associates LLC in Houston, said of the price that was posted as negative until Flint Hills revised it on Monday.
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