RE: Economics and Regulation I read some time ago that the majors were developing oil sands projects at ~$40,000 to $45,000 per flowing barrel but the projects were 25+ years which lessened the risk profile for development.
Cenovous provides other guidance albeit mostly for oil sands:
https://www.cenovus.com/news/news-releases/2012/1212-2013-budget.pdf
Shale oil plays consume enormous amount of capital as you have to drill thousands of very high costs wells to develop the reserves. So the concern about competition for capital is an issue. Further the Canol is going to be expensive to develop. MGM has said that the wells are 3 to 5 times as expensive as NE B.C, but once the infrastructure is in place they will cost about the same. This may seem optimistic, but the Canol wells are less than 1/2 the depth of wells in NE B.C
If non-conventional oil is targeting project development costs of $25,000 - $30,000 per flowing barrel, where would the Canol land? If the quote above is accurate then you’d be looking at $45,000 – $150,000/barrel; with fairly steep decline curves. This would be a very hard sell in a marketplace that is capital constrained and in turn would make a number of other plays more attractive on a buy-in opportunity. How would this reality factor into the the likelihood of commercial development for the Canol?
Regards
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