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Why Canada's Oil Sands Look Like a Shaky Investment

A new study (PDF) examining the economics of Western Canada’s oil sands finds that even if the Keystone XL pipeline gets built, it’s unlikely that extracting the heavy, tar-like oil around Alberta will remain commercially viable over the next decade.

The report, written by two former Deutsche Bank analysts and titled Keystone XL Pipeline: A Potential Mirage for Oil-Sands Investors, calculates that producers in Western Canada will need to fetch at least $65 a barrel to attract new investments and ensure that current projects remain profitable. During the past month a barrel of Western Canadian Select (WCS), the main benchmark used to price Canada’s heavy oil, has averaged just $58.