Clean Oil That Only Costs $20

Low prices and rising concerns over the “dirty” nature of tar sands production, which is believed to be one of the most carbon-heavy methods of energy production, fueled an exodus.

Oil sands gained a bad reputation as the dirtiest source of energy, which fueled a political backlash. News coverage of Canada’s oil industry has lately focused on how tar sands production is dirty, costly, destructive and ultimately non-economical. Opposition to new tar sands projects inside the U.S. has risen in recent years.

But that trend may be reversing. Despite divestment, bad press and lower-than-average prices, oil sands production will increase in 2018.

Unlocking Potential

Advances in oil sands technology, and efforts to make the process cleaner and cheaper, means that the sector could be poised for a turnaround.

Petroteq Energy is pioneering safe and clean methods for unlocking oil sands assets. The company has two patents on technical methods for extracting oil sands in a way that avoids producing waste materials.

The company produced 10,000 barrels from its production facility in Utah in 2015 using its brand-new technology, and now it’s upgrading a second facility in Utah to increase its production capacity.

The company’s goal, according to CEO Alex Blyumkin, is developing “sustainability.” Proprietary methods allows Petroteq to extract oil sands without producing excess waste. By utilizing blockchain technology, the company cuts down on production costs and allows oil sands production to be more streamlined.

Petroteq has already found interested partners in Mexico, where it has signed a lucrative deal with national energy company Pemex for its blockchain-based management platform.

Other companies are getting in on the action as well. By following Petroteq’s lead, unconventional drillers are taking a second look at oil sands production.

Question of Cost

What made shale drilling in the U.S. so successful was the question of cost. At a time when oil prices were plummeting, American drillers used new technology to radically cut costs and maintain competitiveness. By 2017, shale drillers had reduced cost by as much as 42 percent.

Today, the average cost of a barrel of fracked oil varies between $20 and $50. That might look like a lot compared to cheap oil from Saudi Arabia or Kuwait, where per-barrel costs can be as low as $10.

But that doesn’t take into account “social costs” that OPEC states have to consider. The plunge in oil prices after 2015 placed immense pressure on OPEC states, which all depend on oil exports to maintain fiscal equilibrium.

Middle Eastern oil producers have endured immense pressure, while Venezuela was thrown into political and economic chaos by the drop in prices.

Social costs, according to a study by the Oxford Institute for Energy Studies, will increase the cost of OPEC oil in the coming years. While U.S. shale drillers can operate profitably with prices at $50 per barrel, OPEC countries ideally want $70 or even $100 a barrel to sustain their economics. This gives U.S. producers a massive competitive edge.