THE OIL SANDBOX

Edwards sees threat to oil sands projects
Dave Ebner, 22 September 2006 (Toronto Globe and Mail)

- High costs will likely derail some projects in the oil sands, according to Murray Edwards, the reclusive vice-chairman of Canadian Natural Resources Ltd., one of many firms working in the overheated Fort McMurray region of Alberta…It was the strongest public declaration yet from a senior industry executive that some projects may not go ahead as planned…"These projects, long term, need prices higher than $50 [U.S. a barrel]," Mr. Edwards told reporters after in a rare public appearance yesterday afternoon at the Alberta Global Business Forum…
- A tally of industry projects suggests that oil sands production could quadruple to as much as four million barrels a day in 2020, up from about one million today.
Such growth would make Canada one of the world's most significant oil producers…
- Pressures around Fort McMurray -- competition for labour, construction materials such as steel and the region's overstretched infrastructure -- have already forced one global player to amend its plan. Paris-based Total SA, which bought into the oil sands a year ago, had hoped to see some production in 2010 but in August revealed first production is now set for 2013…

- While Mr. Edwards was skeptical that the industry could deliver on heady forecasts for production gains, he was bullish about the prices of crude oil and natural gas.
He said supply-and-demand fundamentals for both commodities indicate oil could stay higher than $60 a barrel through the end of the decade and natural gas could average at least $8 for a 1,000 cubic feet…
- Among the pressures in the oil sands, Mr. Edwards highlighted the demand for labour…
- Cost escalation in the oil sands has been and remains extreme. In just the past five years, Mr. Edwards said the price to build a project has doubled. The trend remains intact…