Cenovus Warns Oil Sands Growth Is Drying Up as Policy Uncertainty Mounts
US Hits Iran-Flagged Oil Tankers While Peace Talks Continue Cenovus Energy(TSX, NYSE: CVE) just posted one of its strongest quarters on record.
Its CEO used the earnings call to deliver one of the starkest warnings the oil sands industry has heard in years.
Jon McKenzie told analysts on Wednesday that Canada's national conversation around oil sands development has become "myopically focused on the climate agenda" — and that the consequences are already playing out in the investment numbers.
The country, he argued, has spent over a decade making itself one of the least attractive places on earth to build new oil production.
Only one new greenfield oil sands project has been approved and built in Canada since 2013, even asglobal demand for oil has continued to grow.
What growth Cenovus and its peers have managed has come through acquisitions and wringing more out of existing assets — not by breaking new ground.
"Greenfield development comes at a higher cost and a higher break-even than the growth that you've seen to date," McKenzie said.
"We have to be pretty thoughtful about a set of policy environments that really do allow us to grow and fill a pipeline." SetOilPrice.comas a preferred source in Googlehere.
The policy environment he's referring to is, in part,Alberta's still-unresolved carbon pricing standoff with Ottawa.
Prime Minister Mark Carney and Alberta Premier Danielle Smith signed a memorandum of understanding last November that committed to a new pipeline and an industrial carbon price of C$130 per metric ton.
They set an April 1 deadline to finalize the deal.
It blew past without resolution and talks are still ongoing.
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