As reported by the Globe and Mail’s Jeff Lewis, it does not look like the recent drop in oil prices will impact production levels for Canadian oil sands producers. In fact, many companies, including Cenovus Energy, are forecasting a jump in production levels for 2015.
The main reason behind oil sands production increasing despite a current trading price of about $50/barrel is that companies cannot stop the development of new facilities or expansions scheduled to come online. When several years of hard work and billions of dollars have been invested in a central processing facility, production needs to move forward. These projects “can’t just turn on a dime,” said Judith Dwarkin, director of research at ITG Investment Research in Calgary. “They’re not going to stop, even though prices are low.”