UPDATE 1-Suncor CEO says oil sands profitable at $50 crude

(Refiles to indicate in headline is Update 1) (In U.S. dollars unless noted)

By Jeffrey Jones

CALGARY, Alberta, April 1 (Reuters) - Existing oil sands operations generate double-digit returns with oil around $50 a barrel and costs of new projects have started to fall in the industry downturn, the chief executive of Suncor Energy Inc (SU.TO), Canada's No. 2 oil sands producer, said on Wednesday.

The economics for Suncor -- which has launched an C$18.4 billion ($15 billion) takeover of Petro-Canada (PCA.TO) -- are closer to break-even with oil at $40 a barrel, but prices may only dip that low once more this year, CEO Rick George said.

"You can make a great return, double-digit, well above our cost of capital, in the high $40 and low $50 range," George told an energy conference hosted by the CFA Institute.

Crude oil hit a record above $147 last July, but with the recession the price tumbled below $34 earlier this year, prompting companies to cancel or postpone more than $90 billion worth of expansions and new projects.

U.S. benchmark crude fell $1.27 on Wednesday to settle at $48.39 a barrel.

Last year, at the height of the boom, George said new developments required oil prices above $80 a barrel, as labor shortages and inflation in materials like steel led to runaway costs in the oil sands of northern Alberta.

But the downturn has "flushed" the industry of weaker companies and marginal projects, pushing costs down, he said.