Canadian companies among few to cut oil production in face of low prices

CALGARY -- Consultancy Wood Mackenzie says Canadian oil producers are among the very few globally who have reduced output in the face of low oil prices.

See Full Article

Wood Mackenzie says it found that only about 100,000 barrels a day -- or 0.1 per cent of global production -- has been cut as oil trades below US$35 a barrel, even as 3.4 million barrels of production is unprofitable at that price.

About 30,000 barrels of that production cut has come from older conventional and heavy oil wells in Canada, with the rest from ultra low-output wells in the United States and some aging offshore wells in the United Kingdom's North Sea.

But while Canada represents about a third of the reduced output, it accounts for more than half of unprofitable global production due to high costs and lack of access to markets.

Wood Mackenzie estimates that 2.2 million barrels a day of Canadian production is operating at a negative cash cost when oil is at US$35 a barrel, meaning more than half of Canada's total output of about 3.9 million barrels a day is currently unprofitable.

Much of that unprofitable production is coming from the oilsands, but Wood Mackenzie says that because of the costs and complexity of shutting down bitumen production, operators are reluctant to reduce output.

"Given the cost of restarting production, many producers will continue to take the loss in the hope of a rebound in prices," said Robert Plummer, vice-President of investment research at Wood Mackenzie.

Other producers who have entered negative cash cost territory include Venezuela with about 230,000 barrels a day of unprofitable production, the U.K. with about 220,000 barrels, and the U.S. with some 190,000 barrels.

The tight oil production from the U.S. that helped spur the glut of global production only starts to become cash negative below US$30 a barrel, Wood Mackenzie said.



Advertisements

Latest Economic News

  • Wholesale trade declines in June after 8 months of gains

    Economic CBC News
    Wholesale trade slipped to $61.4 billion in June, Statistics Canada reported Monday, ending an eight-month streak of expanding sales. Sales in the food, beverage and tobacco industries led the way lower, down 1.1 per cent from May's level to $10.78 billion. Source
  • Wholesale sales dip slightly in June, first decline in months: StatsCan

    Economic CTV News
    OTTAWA -- Canada's wholesale sales declined slightly in June, with the food and auto industries showing the biggest impact. Wholesale sales fell by 0.5 per cent to $61.4 billion, following a series of monthly increases. Source
  • Transat offers sunny Q3 outlook after good start to summer travel season

    Economic CTV News
    MONTREAL -- Transat A.T. Inc. says it's having a better summer season than expected and its third-quarter results will show "significantly higher" adjusted earnings than during the comparable period last year. The Montreal-based travel company says revenue has been higher than anticipated since mid-June when Transat issued its previous outlook and second-quarter results. Source
  • China SUV maker Great Wall considers bid for Jeep unit

    Economic CTV News
    BEIJING -- Chinese SUV maker Great Wall Motors is considering making a bid to buy Fiat Chrysler's Jeep unit, spokespeople for the company said Monday, in a possible ambitious new step onto the global stage for China's fast-growing auto brands. Source
  • World shares mostly down ahead of key central banker meeting

    Economic CTV News
    HONG KONG -- World stocks were mostly lower Monday as U.S. and South Korean joint military drills kept markets on edge and investors awaited a key meeting of central bankers later this week. KEEPING SCORE: European shares fell in early trading. Source
  • Korea tensions keep a lid on global markets

    Economic CTV News
    LONDON -- Global stock markets traded in narrow ranges Monday as investors awaited a key meeting of central bankers later this week and continued to monitor developments on the Korean peninsula. KEEPING SCORE: In Europe, the FTSE 100 index of leading British shares was steady at 7,326 while Germany's DAX fell 0.3 per cent to 12,132. Source
  • Back to school: How mature students can fund continuing education

    Economic CTV News
    VANCOUVER -- When Kear Porttris decided to pursue a university degree in 2010, he had to contend with responsibilities that don't cross the minds of many freshman straight out of high school, including paying his mortgage and feeding his daughter. Source
  • Trump gets the headlines but NAFTA talks face a Mexican deadline: Don Pittis

    Economic CBC News
    President Donald Trump's braying about NAFTA being the "worst trade deal maybe ever signed anywhere" might leave the impression that U.S. negotiators have all the cards in the current renegotiation. But according to Canadian trade experts the real wild card is not the United States or the hostile views of its president. Source
  • First round of NAFTA talks wrap in Washington

    Economic CBC News
    Canada, the United States and Mexico wrapped up their first round of talks Sunday to revamp the NAFTA trade pact, vowing to keep up a blistering pace of negotiations that some involved in the process said may be too fast to bridge deep differences. Source
  • Apple under pressure to dazzle as market slows

    Economic CTV News
    As Apple and Samsung gear up to launch new flagship smartphones, the market leaders are seeking a wow factor that can help them fend off challenges from rising Chinese-based manufacturers. Apple is under particular pressure to dazzle as the culture-changing California iPhone maker looks for a way to maintain its image as an innovation leader in a global market showing signs of slowing. Source