PTTEP further delays Alberta oil sands project

Thailand’s PTT Exploration & Production PCL (PTTEP) will delay its final investment decision on the 612-sq-km Mariana Oil Sands Project near Athabasca, Alta., according to a Reuters report. PTTEP also will record a $550-million impairment in its third-quarter earnings.

Thailand’s PTT Exploration & Production PCL (PTTEP) will delay its final investment decision on the 612-sq-km Mariana Oil Sands Project near Athabasca, Alta., according to a Reuters report. PTTEP also will record a $550-million impairment in its third-quarter earnings.

The Thai state firm originally signed on to the concession in May 2014 after dividing interests with Statoil ASA (OGJ Online, May 29, 2014). At that time, Statoil took 100% ownership of the Leismer and Corner development projects, while PTTEP assumed 100% of the Thornbury, Hanginstone, and South Leismer areas. At the closing, Statoil paid PTTEP $200 million (US) as well as a working capital adjustment of $238 million (Can.).

Statoil, along with Royal Dutch Shell PLC, ConocoPhillips, and Marathon Petroleum Corp. have withdrawn from Canada’s oil sands as of midyear (OGJ Online, Aug. 28, 2017).

The Canadian Energy Research Institute estimates that field-gate costs for stand-alone oil-sands mines have fallen by 6% since 2015 and for steam-assisted gravity drainage projects by 27%. Most future production in the oil sands will come from SAGD and other in situ methods.

Costs of production from oil-sands projects of all types remain high. After adjustment for blending and transportation, CERI's estimate of the West Texas Intermediate-equivalent supply cost for output from a hypothetical SAGD project at Cushing, Okla., is $60.52/bbl. For a stand-alone mine, it’s $75.73/bbl. Still, the WTI-equivalent cost for a greenfield project is 25% lower than it was a year ago. For a stand-alone mine, it’s 16% lower.

PTTEP cited weak oil prices for its project delay, Reuters said. Despite this trend, CERI estimates that oil sands projects will remain a profitable long-term investment through 2036 (OGJ Online, Oct. 2, 2017).

PTTEP’s impairment marks its third on the Marianas oil sands project since 2014, totaling $1.8 billion.

Contact Tayvis Dunnahoe at tayvisd@ogjonline.com.

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