Oilsands projects put at risk for falling price of crude
Posted Sep 23, 2011 7:56 am.
This article is more than 5 years old.
Oil producers planning for the long-term could postpone or cancel new projects in Northern Alberta if crude stays below $80 a barrel.
That’s according to leading Alberta economist, Todd Hirsch, with ATB Financial.
Hirsch says analysts are watching for trends and could decide to cancel developments as they border on being uneconomic.
He says $80 tends to be the tipping point for new technologies like SAGD efforts.
“The ones that are more technologically advanced, some of those capital projects because of the intensity and types of technology that they’re using, are more expensive,” Hirsch says.
Hirsch says older developments such as mines, projects that Albertans may be more familiar with, have a much lower tipping point.
However, he adds it’s important to note it’s not time for panic just yet.
“If it falls below $80 and it looks like it will stay there, some of those operators, not all of them, may say they’ll keep their projects on the drawing board for now,” says Hirsch.
He says people can panic when crude dips below the $60 mark.
Ramifications could reach beyond Alberta as new oilsands developments are expected to add more than $2.1-trillion to the national economy over 25 years.
Overall, Hirsch says analysts will be looking for long-term trends and won’t be affected much by long-term trading.
