Oilsands production to dip
CALGARY Oilsands production growth will slow in the coming years as expansion projects currently underway wrap up and new projects are sanctioned at a more measured pace, according to a new report from IHS Markit.
The report, released Thursday, predicts new oilsands production will slow down after 2019, when the sector will add 100,000 barrels per day of production per year or roughly half current annual growth rates.
“In recent years — even through lower prices — it was not uncommon for oilsands production additions to average more than 150,000 or even 200,000 barrels per day annually,” Kevin Birn, director for IHS Energy said.
However, over the next two years Canadian oil production growth will be exceeded only by U.S. tight oil. “Nearly a half-million barrels per day of new oil sands production will be added in 2017-18,” the report noted.
Birn said the reason for the production increases even through periods of depressed oil prices is that oilsands projects have long lead times and require years to move from sanctioning to first oil production. “Similarly, decisions to defer or delay oilsands projects in recent years will weigh on growth rates after 2019. No one has sanctioned a new project since 2014, you don’t have the same amount of activity in the hopper and you have reduced investment as a result,” Birn said.
Suncor Energy Inc.’s massive Fort Hills oilsands mine was sanctioned in 2013 and is scheduled to begin producing this year. Canadian Natural Resources Ltd.’s Horizon expansions have similarly been under construction for year with an additional phase scheduled for completion this year.
After these already-under-construction projects wrap up, IHS Markit predicts future oilsands growth will be dominated by smaller expansion projects rather that new greenfield ones like the Fort Hills project.
At forecast growth rates, IHS expects total oilsands production to rise from current levels of 2.7 million bpd to 3.6 million bpd by 2026.
The IHS report’s predictions are similar to the Canadian Association of Petroleum Producer’s annual crude production forecast released June 13, which shows oilsands production is set to grow to 3.65 million barrels per day by 2030.
Birn said there was potential for further oilsands growth with new processes.
“The oilsands has always been a story of innovation and it is too soon to rule out the potential for technology to change the game in the oilsands.”