The Canadian oil sands appear to be running alternately hot and cold these days.
This week, we saw Total SA
Narrows Lake is just north of Christina Lake, one of the properties subject to Cenovus' joint venture with ConocoPhillips
The more I study these SAGD projects, the more attractive they look relative to the hulking bitumen mining and trucking operations like Canadian Natural Resources'
For now, let's just focus on cost. Last year, I noted that Horizon came online at a capital cost of around $84,000 (Canadian) per daily flowing barrel -- a discount compared to Suncor's projections for its own Voyageur expansion. It's not unreasonable to assume that Cenovus can develop Narrows Lake at half the per-barrel cost of these open-pit mining operations.
I think these economics go a long way toward explaining why EnCana/Cenovus can push forward with this plan while Total sits around waiting for higher oil prices.