Athabasca Oil Corp. has called the first halt to an entire Canadian bitumen production site in response to depressed prices and the economic contraction caused by the coronavirus pandemic.
The Calgary firm mothballed its Hangingstone operation, shutting in about 9,500 b/d tapped by steam injections from natural gas-fired boilers into a northeastern Alberta oilsands deposit near Fort McMurray.
Just to break even financially, Athabasca said the plant needed a heavy oil price of $37.50/bbl, or more than four times the most fetched since early March by Alberta benchmark Western Canada Select.
The Hangingstone output was only 0.3% of Alberta’s 2.9 million b/d oilsands production and 0.2% of Canada’s total 4.6 million b/d output of all crude types. Canadian exports nudging 3.8 million b/d dominate oil imports by the United States.
But Athabasca’s announcement supported Canadian analyst predictions of industry-wide production cuts. Said one analyst, “It is unfortunate that made-in-Alberta assets like Hangingstone cannot continue operations under current prices.”
While analyst forecasts anticipate overall cuts of 10% or more, the Canadian oil supply outlook remains uncertain due to wide variations in production costs among companies and talks on potential industry aid with the Alberta and federal governments.