This article supplied by Troy Media.

 By Rashid Husain Syed

Low-cost oilsands give Canada a crucial edge as U.S. shale oil struggles with rising costs

While global oil markets have rebounded slightly on news of a U.S.-China trade truce, not all producers are equally positioned to benefit. In North America, the contrast is clear: Canada’s oil sector is built for stability, while the U.S. industry is showing signs of strain.

Canada’s oil production is dominated by the oilsands —capital intensive to build, but efficient and low-cost to maintain. Oil sands projects involve mining or steaming oil from sand-rich deposits and can produce for decades, unlike U.S. shale wells that decline rapidly and require constant reinvestment. This gives Canadian producers a structural edge during market downturns.

“The largest companies here in Canada … they have cost structures that are among the best in the world,” said Randy Ollenberger of BMO Capital Markets. “They can withstand WTI (West Texas Intermediate) prices in the range of US$40 and still have enough cash ow to maintain production.”

Mid-sized conventional producers in Canada often break even at US$50 to US$55 per barrel. Major players like Canadian Natural Resources can operate sustainably in the low-to-mid-US$40 range. A break-even price is the minimum oil price needed to cover production costs and avoid operating at a loss.

“We’re not planning on shutting any rigs down or changing our plans, yet,” said Brian Schmidt, CEO of Tamarack Valley Energy. “And it largely is
because our company can tolerate, and is quite profitable, at low prices.” He added: “I think we had already, even before the downturn, put ourselves into a defensive position.”

The data supports that confidence. According to Statistics Canada, 2024 was a record year: crude oil and equivalent output rose 4.3 per cent to 298.8 million cubic metres (about 1.88 billion barrels); exports increased five per cent to 240.4 million cubic metres; and shipments to non-U.S. markets jumped nearly 60 per cent, aided by the completion of the Trans Mountain pipeline expansion.

Nearly 89 per cent of Canada’s oil exports still flow to the United States, but structurally, the two industries are diverging fast.

In the U.S., the shale-driven oil boom is losing steam. Production dropped from a record 13.465 million barrels per day in December 2024 to 13.367 million, according to the U.S. Energy Information Administration.

Industry leaders are warning of a turning point.

“It is likely that U.S. onshore oil production has peaked and will begin to decline this quarter,” said Travis Stice, CEO of Diamondback Energy, the largest independent producer in the Permian Basin. The company is “dropping three rigs and one crew this quarter.”

ConocoPhillips, another major player, is also pulling back. It reduced its capital budget to between US$12.3 billion and US$12.6 billion—down from US$12.9 billion—citing “economic volatility.” Rig counts are falling as well, according to oilfield services company Baker Hughes.

The core challenge is cost. A Federal Reserve Bank of Dallas survey found that Texas producers’ average break-even price is around US$65, the cost to drill replacement wells ranges from US$50 to US$65, and growth drilling requires prices between US$78 and US$85.

Even after the recent rebound—sparked by the May 12 U.S.-China trade truce—West Texas Intermediate sits at around US$63.07, below what many U.S. firms need to expand operations.

Shale’s short life cycles, higher reinvestment demands and rising capital discipline are colliding with lower prices. The U.S. sector is being forced to slow down.

Canada’s oil sector isn’t just surviving—it’s adapting and growing in a volatile market. With lower ongoing costs, long-life assets and increased export flexibility, Canadian producers are proving more resilient than their American peers.

With tens of thousands of jobs across Canada tied to the oilpatch, the sector’s ability to remain profitable through downturns is critical to Canada’s economy,  government revenues and energy security.

In a world of unpredictable oil prices, Canada is playing the long game—and winning.

Toronto-based Rashid Husain Syed is a highly regarded analyst specializing in energy and politics, particularly in the Middle East. In addition to his contributions to local and international newspapers, Rashid frequently lends his expertise as a speaker at global conferences. Organizations such as the Department of Energy in Washington and the International Energy Agency in Paris have sought his insights on global energy matters.

Troy Media empowers Canadian community news outlets by providing independent, insightful analysis and commentary. Our mission is to support local media in helping Canadians stay informed and engaged by delivering reliable content that strengthens community connections and deepens understanding across the country.

From the Daily Caller News Foundation

By MARIANE ANGELA

Voters in Cameron County, Texas, overwhelmingly approved Saturday a measure to incorporate Elon Musk’s rocket complex near Brownsville as a new municipality called Starbase.

Unofficial results posted Saturday night showed 98% of the 177 ballots cast supported the creation of the town, which includes SpaceX facilities and housing tied to the company, according to The Wall Street Journal. Only residents living within the proposed town’s boundaries were eligible to vote, most of whom work for or are affiliated with SpaceX.

Once county commissioners certify the election, Starbase will begin operating as an official municipality under Texas law, which marks the launch of a rare company-run town where most residents are tied to SpaceX. The new town will oversee zoning, budgeting, and staffing while adhering to state transparency rules such as open meetings and public records requirements.

SpaceX has said little publicly about its plans, but company officials previously suggested the town could help streamline operations and support workforce growth. SpaceX vice president Bobby Peden was elected mayor of the new town and legal experts noted that state law includes conflict-of-interest rules for public officials employed by private firms operating within the municipality.

Local officials have expressed support for the company due to the thousands of jobs and tourism revenue generated by Starbase since SpaceX employs roughly 3,400 workers and contractors at Starbase. However, some residents and environmental groups remain concerned about increased rocket activity, limited beach access, and the town’s close ties to the company that created it.

The Starbase site has become central to Musk’s vision of human spaceflight, particularly SpaceX’s development of Starship, a nearly 400-foot rocket designed for missions to the moon and Mars. Though early test flights have ended in explosions, recent missions have demonstrated partial recovery capabilities and Musk described the area as a “Gateway to Mars.”

Musk will not hold a formal political role in Starbase, but the town is his brainchild, and since announcing the idea in 2021, he has urged employees to move there and expanded his personal and corporate presence in Texas. He relocated his primary residence and key businesses to the state and now lives in a $35 million compound in Austin.