- Canadian oil sands benefit from geology, technology, and cost-cutting measures
- Canadian oil sands have lower break-even prices than U.S. shale producers
- Technological advances improve efficiency and reduce costs in oil sands operations
CALGARY, July 16 (Reuters) – Giant shovels, driverless trucks and a dog-like robot have all helped Canada’s oil sands companies including Imperial Oil and Suncor become some of North America’s lowest-cost oil producers, driving down overheads even as the worst inflation in a generation pushed U.S. shale costs up.
As the global oil industry enters a downturn due to economic uncertainty related to U.S. tariffs policy and OPEC+ pumping more barrels, Canada’s oil sands industry finds itself in a position of strength.
In the years following the oil price crash of 2014-15, international oil majors including BP, Chevron and Total sold their interests in Canadian oil sands. At the time, they classified the Canadian operations as among their more expensive, and therefore less profitable, projects worldwide. They directed their capital to cheaper oil production, and favored U.S. shale for its quicker drilling time and returns.
Since then, new technology and cost-cutting efforts have driven meaningful improvement in the industry’s competitiveness that make oil sands among the cheapest producers, according to a dozen industry insiders and a Reuters analysis of the latest U.S. and Canadian company earnings.
While U.S. shale companies are responding to this year’s oil price downturn by dropping rigs, slashing capital spending and laying off workers, the oil sands’ position of strength means Canadian companies have made virtually no changes to their previously announced production or spending plans. Some Canadian politicians are now calling for a new crude pipeline from Alberta to the Pacific coast, as part of a broader effort to strengthen the country’s economy in the face of U.S. tariff threats.
The lower crude prices this year have little impact on the Canadian oil sector, Cenovus CEO Jon McKenzie said in an interview earlier this year. “This is an industry that has become much more resilient through time,” he said.