News

November 17, 2008

The Oil Sands Industry Faces An Uncertain Future

John Hughman

The plunging oil price may have brought welcome respite for the world’s motorists, but those involved in the oil sands industry aren’t smiling. With an oil price of less than US$60 dollars a barrel and – with a global recession brewing – that price heading in only one direction, the economic case for sands production is looking shakier by the day. That’s forcing many oil sands producers to reassess their plans, at least for the time being.

Canada’s Suncor and Petro-Canada - the world’s two largest sands producers - have already said that they’ll put new projects on hold and delay capital expenditure, specifically the large investment in the ‘upgraders’ they need to turn the bitumen into synthetic crude oil that can be used as fuel.

The biggest of them all, Suncor, said that it would rather wait a year and pay for the new plant out of cash flows than expose itself to the uncertainties of the credit-crunch ravaged debt markets....