Oil sands engine slowing

Economic activity is slowing dramatically around the world. Analysts are rerunning financial models more frequently and every iteration produces a weaker result. These conditions are especially true for energy analysts, given the dramatic weakness in crude oil and natural gas prices. As oil sands investments are said to be the economic engine of Alberta, if not of Canada, then related recent news is shocking to investors and governments.

Highlighting the rapidly changing outlook for energy investment generally and oil sands in particular is the contrast in January reports from two oil sands entities.


The Oil Sands Developers Group (OSDG) is a non-profit, industry funded association of oil sands project owners based in Fort McMurray. In a presentation delivered on Jan. 14, OSDG showed graphs of updated forecasts as of December 2008 versus January 2008 of oil sands production and expenditures for the three-year period 2008 through 2010.

The forecast of bitumen production (low gravity crude oil) for the period is little changed from the forecast from one year ago. This is more than a little surprising given capital spending forecasts by major oil companies.

Financial Post