Alberta Oil Sands Emerge as Top North American Play

The oil sands in Alberta have emerged as one of North America's most attractive oil plays due to lower costs, according to a recent report. The region holds 177 billion barrels of proved reserves, making it the largest play on the continent.

Existing operations in the oil sands have some of the lowest production costs on the continent, said Trevor Rix, a director with Enverus Intelligence Research. Some steam-assisted gravity drainage (SAGD) operations can break even at less than $40 per barrel.

In contrast, costs in the Permian Basin in Texas have risen to around $65 per barrel, making the oil sands an increasingly competitive option.

Kevin Birn, chief analyst for Canadian oil markets at S&P Global, said that the economics of the oil sands sector have been poorly understood. However, he noted that once the initial capital costs are sunk, the oil sands become a 'production machine' with low sustaining costs.