The price of oil started a second day above $54 on Tuesday, with serious observers seeing $70 oil “around the corner” and even the operators of costly projects like Canada’s oil sands saying the current price “will do”, provided costs keep falling or stabilize.

Despite notching a net loss of $189 million, Canadian oil sands developer Suncor announced this week that its operating costs were now “just” $33.70 per barrel, down from $37 late in 2008. The company said it’s oil sands projects were all going forward and the current price range for oil would suffice.

Oil sands producer Imperial Oil is still making money and reported first-quarter net income of $289 million. It’s Kearl oil sands project helped replace 50 percent of reserves and added 800 million barrels.

Cost “discipline” is in force at Imperial, and with costly engineering, road-building, land-clearing and construction taken care of in 2008, long-lead steel is being ordered just as steel prices have come crashing down by up to $80 per tonne. Now the company targets the first 100,000 barrels of bitumen a day ahead of plateaus of up to 300, 000 bpd Kearl is seen reaching for its 40-year future.

Moreover, management is all but flatly saying Brent crude’s $44.44 first-quarter average price — though down 55 percent year-on-year — is good enough to see Kearl through development.

Ironically, falling gas prices and Western Canada’s gas-rich environment has also helped the power-intensive oil sands developments trim costs. Rolled back gas and steel prices means a major chunk of the cost formula has been wiped out.

Meanwhile, the price of oil is up nearly 40 percent since the northern winter’s darkest hours, and it might have risen more sharply had it not been for the strengthening American dollar.

In Norway, where oil sands player StatoilHydro was preparing a statement for Scandoil.com about falling oil sands costs, number-crunching analysts at DnB NOR told Norwegian newspaper Dagens Næringsliv of a belief in the coming fourth-quarter spike to $70 oil.

Tags: Imperial Oil, StatoilHydro, Suncor Energy