Syncrude Canada Ltd. (COS) has identified additional possible reductions net to Canadian Oil Sands Ltd. in operating, development, and capital costs of $260-400 million relative to its 2015 capital budget reported in December.
The estimate for capital expenditures has also been reduced to $451 million net to COS, which includes $104 million of remaining expenditures on major projects and incorporates $110 million in cost reductions.
COS is reducing its estimate for the average WTI crude oil price to $55/bbl. The estimate for operating expenses has been reduced to $1,521 million, or about $40/bbl, based on a production estimate of 103 million bbl at Syncrude and a natural gas price assumption of $3/gigajoule.
The decrease is comprised of $166 million in cost reductions and $45 million due to the lower natural gas price assumption.
COS says it doesn’t anticipate the reductions will impact production or reliability initiatives under way at Syncrude. Production of 35-40 million bbl net to COS is still expected for the year.
COS is maintaining its estimate for annual Syncrude production at 95-110 million bbl with a single-point estimate of 103 million bbl.
“While the potential cost savings announced today are substantial, Syncrude is continuing to examine the longer-term opportunities to achieve a sustainable, lower cost structure,” explained Ryan Kubik, COS president and chief executive officer. “Syncrude and its owners strongly believe the competitiveness of the business can be enhanced through the full oil price cycle,” he said.