Canada second in oil output growth: report
Estimates revised due to ‘robust production’
Canadian oil production could edge closer to the five million barrel-per-day milestone in 2018, with supplies expected to grow the second-fastest among major producers in coming years, a new report says.
In its monthly oil report released Wednesday, the Paris-based International Energy Agency said Canadian oil output is expected to rise by 290,000 bpd this year, and by another 200,000 bpd in 2018 to reach 4.95 million bpd.
The IEA's estimates for Canadian oil output were revised upward due to “robust production” across the sector, particularly in the oilsands.
The IEA report also estimated U.S. oil production will grow 470,000 bpd in 2017, and as much as 1.1 million bpd in 2018. The country remains the fastestgrowing non-OPEC producer in the world, just ahead of Canada.
Together, the 2.06-million bpd surge in North American output over the next two years could offset any new measure by OPEC to extend its 1.8 million bpd cut beyond March 2018 — an idea that appears to be gaining support among OPEC members and its allies.
U.S. crude futures rose 1.1 per cent, to US$48.75 per barrel, after the IEA report also noted that global crude inventories were starting to decline.
Canadian oil production has risen faster than most countries since oil markets collapsed three years ago, as oilsands expansion projects that were commissioned years ago began to come online.
If the momentum continues next year, Canada could displace Iraq as the fourth largest producer in the world after the United States, Russia and Saudi Arabia. Iraq produced an average of 4.5 million bpd in the first half of 2017 and is not expected to see a sharp rise in production in the next 18 months.
Oilsands production is expected to meet the three million bpd threshold by the end of 2018, up from around 2.7 million bpd today. Total Canadian oil supply is expected to near the 4.95 million bpd mark in 2018, and could surpass five million bpd in the second half of the year.
The uptick is mainly due to production growth at Suncor Energy Inc.'s Fort Hills oilsands mine and the Hebron project in offshore Newfoundland and Labrador, operated by a consortium including Suncor, ExxonMobil Corp., Chevron Corp. and others. Construction of Fort Hills is 90 per cent complete, while Hebron is expected to reach first oil this year.
Suncor has raised the nameplate capacity of its Fort Hills project from 180,000 bpd to 194,000 bpd, and has raised its capital spending program to complete production. The venture's costs have also risen to $17 billion, according to the IEA.
Suncor's joint-venture partner on the project, Total SA, recently said it wouldn't raise its spending on the project any further, and has openly contemplated further reducing its stake in the development after reducing its position to 29.2 per cent in 2015.
The report comes amid dimming prospects for long-term oilsands growth, as depressed prices has spurred several international oil companies to shed their positions in northern Alberta. Oilsands production is expected to grow over the next five years, but could see flattening supplies soon after 2020, analysts say.
Companies including Royal Dutch Shell PLC and ConocoPhillips Co. have divested more than $20 billion in oilsands assets since the beginning of 2017, and other producers like Statoil ASA and Total have pared their exposure to the region.