LONDON, February 5, 2015 /PRNewswire/ --
As Canadian oil sands companies struggle with high production costs and low prices, and North American shale producers are forced to rethink strategy, a Utah-based high-tech oil sands play announces game-changing $28 production costs.
Toronto-based MCW Energy Group (MCWEF: OTCQB; TSV: MCW.V) has announced that its Utah production costs per barrel have been slashed to $28 as a result of lower costs of petroleum products used for extraction, while plans to purchase the Temple Mountain oil sands lease would reduce feedstock costs by up to $5 per barrel, bringing total costs down to $23-$24 per barrel.
These prices are nearly impossible find at a time when both oil sands and shale producers are taking a nosedive in this market. Indeed, experts estimate that MCW's per barrel oil production in Utah is more profitable than 95% of shale oil currently being produced, and more profitable than any other oil sands project in North America.
Canadian oil sands heavy crude production costs are around $40-$60 per barrel-vastly more expensive than MCW's $28/barrel oil sands production projections at its newly built processing plant in northeastern Utah - a state that is home to some 32 million barrels of heavy crude buried in sand and silt.
Canadian oil sands companies went on a $155 billion spending spree over the last decade, according to the New York Times, and now are saddled with extremely high productions costs - costs that will have a hard time surviving current low oil prices.
Suncor (NYSE:SU), the largest oil sands operator in Canada, is getting rid of 1,000 contract jobs, says NYT, while Shell Canada - a subsidiary of Royal Dutch Shell (LON:RDSB) and one of Canada's largest integrated oil companies--is slashing its oil sands workforce by 10%. Exxon-controlled (NYSE:XOM) Imperial Oil (NYSE:IMO) - another Alberta oil sands player - just announced a fourth-quarter earnings drop of 36%.
MCW's new oil sands extraction pilot plant at Asphalt Ridge - the heart of Utah's oil sands bonanza - opened on 1 October 2014 - and will have 5,000 bpd coming online in 2016/2017.
At $28/barrel production costs, and likely further cost reductions, this is one of the most profitable oil plays in North America, and certainly the most profitable oil sands play in the current environment.
By James Burgess of Oilprice.com
SOURCE Oilprice.com
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