Some of the world’s biggest oil companies are getting out of the Canadian oil sands.
Companies have sold $24 billion in drilling rights in the sands in just the last five months, according to a new report by the energy research firm Wood Mackenzie. Houston’s Marathon Oil and Norwegian major Statoil have sold off their holdings there. Dutch giant Shell has all but exited, and now ConocoPhillips, also based in Houston, has dumped its most valuable assets.
Oil sands have fallen out of favor since the crash in crude prices left operators searching for cheaper, easier, more efficient fields to drill.
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But these recent sales, noted WoodMac researcher Mark Oberstoetter, have largely gone to firms already in the sands, allowing them to consolidate portfolios, improve operations, and focus on the best fields.
“The oil sands corporate landscape is becoming increasingly concentrated as a result,” Oberstoetter wrote, “and existing players are scaling up dramatically.”
Over 70 percent of oil sands production is now concentrated among four Canadian producers, the report said: Calgary-based Canadian Natural Resources Limited, Cenovus, Imperial Oil and Suncor.
The companies, Oberstoetter said, are working to cut costs, so as to compete with the drilling factories proliferating in the most popular fields, like West Texas’ Permian Basin.