Canadian oil sands production growth is slowing, yet total production is expected to reach nearly 4 million b/d by 2030—nearly 1 million b/d more than current levels—according to a 10-year production forecast by IHS Markit.
The business information provider expects average year-on-year supply additions will be less than 100,000 b/d in the coming decade. By contrast, growth over the current decade averaged additions of more than 150,000 b/d.
Lack of pipeline capacity and oil price insecurity in western Canada discouraged new large-scale incremental investments in the oil sands, said Kevin Birn, vice-president, IHS Markit.
“Large-scale oil sands projects take 2, 3, 4 or more years to be brought online and so the reality of a slower pace of investment and growth in the Canadian oil sands is taking shape,” Birn said. “Yet, ironically the call on Canadian heavy sour crude oil—the principal export from the Canadian oil sands—has never been greater as the rapid deterioration of Venezuelan output tightens the supply of heavy sour crude globally.”
IHS Markit also anticipates that future oil sands production growth will mostly come from existing projects and facilities rather than new projects.
The shift toward slowing oil sands production comes after Alberta’s decision to defer some production because of historic price discounting due to pipeline congestion (OGJ Online, Dec. 3, 2018).
Despite the forecast for slower growth rates, upside potential remains in the coming decade for the Canadian oil sands, Birn said.
“The key to unlocking further upside growth potential in the Canadian oil sands will be the ability of the government and industry to restore confidence that the crude oil produced in western Canada can get to markets at a reasonable transportation cost,” he said.
Paula Dittrick | Senior Staff Writer
Paula Dittrick has covered oil and gas from Houston for more than 20 years. Starting in May 2007, she developed a health, safety, and environment beat for Oil & Gas Journal. Dittrick is familiar with the industry’s financial aspects. She also monitors issues associated with carbon sequestration and renewable energy.
Dittrick joined OGJ in February 2001. Previously, she worked for Dow Jones and United Press International. She began writing about oil and gas as UPI’s West Texas bureau chief during the 1980s. She earned a Bachelor’s of Science degree in journalism from the University of Nebraska in 1974.
