Sign up for our daily briefing
Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.
Catch up on the day's biggest business stories
Subscribe to Axios Closer for insights into the day’s business news and trends and why they matter
Stay on top of the latest market trends
Subscribe to Axios Markets for the latest market trends and economic insights. Sign up for free.
Sports news worthy of your time
Binge on the stats and stories that drive the sports world with Axios Sports. Sign up for free.
Tech news worthy of your time
Get our smart take on technology from the Valley and D.C. with Axios Login. Sign up for free.
Get the inside stories
Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.
Catch up on coronavirus stories and special reports, curated by Mike Allen everyday
Catch up on coronavirus stories and special reports, curated by Mike Allen everyday
Want a daily digest of the top Denver news?
Get a daily digest of the most important stories affecting your hometown with Axios Denver
Want a daily digest of the top Des Moines news?
Get a daily digest of the most important stories affecting your hometown with Axios Des Moines
Want a daily digest of the top Twin Cities news?
Get a daily digest of the most important stories affecting your hometown with Axios Twin Cities
Want a daily digest of the top Tampa Bay news?
Get a daily digest of the most important stories affecting your hometown with Axios Tampa Bay
Want a daily digest of the top Charlotte news?
Get a daily digest of the most important stories affecting your hometown with Axios Charlotte
Want a daily digest of the top Nashville news?
Get a daily digest of the most important stories affecting your hometown with the Axios Nashville newsletter.
Want a daily digest of the top Columbus news?
Get a daily digest of the most important stories affecting your hometown with the Axios Columbus newsletter.
Want a daily digest of the top Dallas news?
Get a daily digest of the most important stories affecting your hometown with the Axios Dallas newsletter.
Sign up for Axios NW Arkansas
Stay up-to-date on the most important and interesting stories affecting NW Arkansas, authored by local reporters
The issue
Big international oil powerhouses (ConocoPhillips, Statoil, Shell) are pulling out or retreating (ExxonMobil) from their Canadian oil sands investments — a seemingly counterintuitive strategy given that the Canadian oil sands are the third largest reserve of crude oil in the world.
The facts
They're reconsidering to save on costs. The oil sands in Canada have some of the highest operating costs in the world paired with low profits. Plus, Canadian oil sands have greenhouse-intensive sources of crude oil and have limited pipeline access to markets, which leaves little flexibility for oil companies.
Instead, some big oil is seeking out lower-cost and higher-stability operations in the Permian Basin in New Mexico and Texas, the second largest oil field in the world whose crude production increased in all but three months last year. Crude oil is expected to increase to 2.4 million barrels per day in May, according to the EIA.
ExxonMobil, Shell, and Chevron (also considering leaving the Canadian oil sands) are already in on these advantages — they invested $10 billion this year in the Permian Basin. ConocoPhillips has legacy acreage in the basin, and is likely to increase production this year, too, per The Motley Fool.
Why it matters
Companies' departure from Canada's oil sands came as a shock on Wall Street, but it is becoming more common.
Plus, this will shift international energy dynamics: Saudi Arabia, which has the largest oil field in the world ahead of the Permian Basin, could be weakened by this competing investment. And many of the Canadian companies now have room to nudge into their own oil sands and consolidate their ownership, giving them a competitive edge.