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Athabasca Suspends Canada Oil-Sands Operation on Low Prices

Bloomberg logoBloomberg 4/3/2020 Michael Bellusci
a close up of a light: GASCOYNE, ND - OCTOBER 14: Miles of unused pipe, prepared for the proposed Keystone XL pipeline, sit in a lot on October 14, 2014 outside Gascoyne, North Dakota. (Photo by Andrew Burton/Getty Images) © Photographer: Andrew Burton/Getty Images North America GASCOYNE, ND - OCTOBER 14: Miles of unused pipe, prepared for the proposed Keystone XL pipeline, sit in a lot on October 14, 2014 outside Gascoyne, North Dakota. (Photo by Andrew Burton/Getty Images)

(Bloomberg) -- 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% 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 $37.50 a barrel for Western Canadian Select, according to the company’s statement.

Western Canadian Select traded just under $12 Friday, 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.

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.

(Updates Canada crude pricing in 4th paragraph)

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