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Updated June 2020

The supply cost of a resource project is the minimum price needed to recover all capital expenditures, operating costs, royalties, and taxes, as well as to earn a specified return on investment. Supply costs serve as an indicator of a project's economic viability.

In Situ: Supply costs for in situ projects around US$40 per barrel (/bbl) for expansion projects to US$50/bbl for greenfield operations. Decreased capital cost and higher capacity in situ projects supported lower supply costs in 2019.

Mining: Supply costs for greenfield mining projects ranged between US$75/bbl and US$85/bbl. Despite technological innovations and other measures to lower operating costs, significant upfront capital costs at mining projects continue to challenge economic viability.

Table S3.4 shows 2019 crude bitumen supply costs with a selection of key assumptions, such as project capacities, utilization rates, and capital costs.

Input cost data are based on 2019 Canadian dollars while the resultant supply costs per barrel are converted to U.S. dollars that can be used to compare to the West Texas Intermediate benchmark.

The supply cost estimates for 2019 include assumptions based on current carbon regulations, which require oil sands projects that produce more than 100 000 tonnes of carbon dioxide equivalent per year to reduce their emissions. Under Alberta's Technology Innovation and Emissions Reduction (TIER) regulations, product-specific emission benchmarks, such as oil, are set by the highest performing companies with the lowest emission intensities.

Companies exceeding these benchmarks will be required to come into compliance, which include improvssing facilities to reduce emissions, using credits earned or purchased from facilities under the benchmark, or contributing to Alberta's Climate Change and Emissions Management Fund. As such, carbon costs have been factored into the supply cost estimates for in situ and mined projects.

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