Athabasca Oil Corp. fully suspended its Hangingstone oil sands operation to combat low oil prices and uncertainty surrounding coronavirus.
The move comes shortly after Athabasca said in March it would curtail production at Hangingstone by about 50 per cent to maximize corporate funds flow and liquidity.
Calls have been mounting for Canadian producers to cut production in light of rock-bottom domestic oil prices and a lack of demand. Athabasca’s Hangingstone Project is an oil sands steam-assisted gravity drainage (SAGD) operation near Fort McMurray, with an operating break-even price of about US$37.50 a barrel for Western Canadian Select, according to the company’s statement. It last traded around US$8.79, according to data compiled by Bloomberg.
Hangingstone produced about 9,500 barrels per day as of February, according to energy bank Tudor Pickering Holt & Co., and is a sign of more to come.
Athabasca’s Hangingstone is a smaller project, but a “further indication of what we anticipate will be a large-scale shut-in response by the oil sands,” analysts from Tudor told clients in a note early Friday.
Industry leader Suncor Energy Inc. said in March it will shut in one of its two so-called trains at its two-year-old, 194,000 barrel-a-day Fort Hills oil sands mine.