RPT-Canadian oil sands producers stay defiant in face of price slump

Tue Jan 20, 2015 7:00am EST
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By Nia Williams

CALGARY, Alberta Jan 20 (Reuters) - Canada's oil sands companies are perilously close to operating at a loss after six months of plunging crude prices, yet many say they have no plans to cut production at their vast projects in northern Alberta.

On the contrary, Syncrude and Canadian Natural Resources Ltd are planning to boost production, in the expectation economies of scale will cut their cost per barrel.

With U.S. crude diving below $45 a barrel last week, companies including Syncrude Canada, Suncor Energy Inc and Imperial Oil Ltd are getting close to operating costs exceeding outright Canadian crude prices.

But these oil sands giants, which have billions of dollars sunk in existing projects, say they have no intention of shutting down operations, preferring to generate whatever cash they can from sales.

A favourable exchange rate is also providing some relief, as producers pay costs in Canadian dollars and receive more valuable U.S. dollars for their crude.

Syncrude forecasts operating costs at C$45.69 ($38.07) per barrel in 2015. Oil sands crude trades at a discount to the West Texas Intermediate benchmark and the outright synthetic price dropped below $42 a barrel at one point last week.

Siren Fisekci, spokeswoman for Canadian Oil Sands Ltd , the largest-interest owner in the project, said Syncrude would ramp up rather than scale back output.   Continued...