Oilsands companies feel the pain as Canadian oil price falls

A drop in Canadian oil prices this week means companies in Alberta's oilsands are breaking even or losing money on their operations.

Currently, oilsands companies are receiving about half as much money for oil compared to elsewhere in North America. That'smaking it difficult for companies to cover their production and transportation expenses.

The value of oil from Albertahas dropped by50 per cent since June.

• Canadian dollar rebounds, but markets still falling on yuan devaluation

"At today's prices, the typical producer is just able to cover those variable costs;many producers are above the typical level and they would be losing money for each barrel that they produce, if they are selling at the spot price today," said Jackie Forrest, a vice-president with ARC Financial, who monitors trends in the Canadian oil and gas industry.

Companies still have other costs to cover such as royalties and debt payments.

A doublewhammy has drivendown Canadianprices since the beginning of July:North American prices have dropped and heavy oil from Canada has fallen further because of increased supply and the closure of refineries and pipelines.

This week, BP shutdown one of its refineries forheavy crude. The facility in Whiting, Ind., may need one month to repair. Meanwhile, Enbridge shutdown both its Line 55 Spearhead pipeline and nearby Line 59 Flanagan South pipeline, following a crude oil leak in Missouri on Tuesday.

Winnipeg drivers cringe as gas prices jump 20 cents per litre

9 years ago

Duration 1:12

Gas prices giving you sticker shock, Winnipeg drivers? Prices at some gas stations have jumped by 20 cents to $1.22 a litre, catching some motorists off guard.

"You have a bunch of demand for Canadian heavy crude that is gone, but it will resolve itself," saidMartin Pelletier withTriVest Wealth, which operates a Canadian energy investment fund.

Pelletier saidthe markets have been in flux with"selling across the board and panic and fear."

The price forWestern Canadian Select (WCS) was $23.48 US a barrel before markets opened on Wednesday.WCS is aheavy crude, a blend of bitumen from the oilsands and conventional heavy oil.

WCS was $86 USin June 2014 and more recently at$51 USin June of this year, according to Alberta government figures.

"There is some shock and awe to see WCS price touching a low under $23 [on Tuesday]," said Pelletier. He expects the price to rebound once the closedrefineries and pipelines begin operating again.