Canadian oil sands production to exceed forecasts on stronger prices

Robert Tuttle, Bloomberg May 09, 2024

(Bloomberg) – Canadian oil-sands production will increase by about half a million bpd by 2030, more than previously forecast, as stronger prices encourage companies to expand existing projects, according to S&P Global Commodity Insights.

Production will rise to 3.8 MMbpd by 2030, about 3% higher than projected last year, S&P said Thursday. Companies including Exxon Mobil Corp.’s Imperial Oil Ltd. unit and Canadian Natural Resources Ltd. are expanding existing oil-sands well sites, taking advantage of the start of new pipeline capacity to the Pacific Coast.

“The extended period of comparatively higher oil prices has strengthened producer balance sheets and has begun to open the door to some more ambitious projects, still primarily leveraging existing infrastructure,” analysts Kevin Birn and Celina Hwang said in a blog post about the report. Several projects are set to grow 20,000 to 50,000 bpd “through optimizations, efficiency gains or commercialization of small-scale assets.”

Rising production from non-OPEC oil producers has frustrated the group’s efforts to support prices through output cuts, with the U.S., Brazil, Guyana and Canada expected to lead a 1.8 MMbpd increase this year, according to U.S. government estimates. Canada’s oil sands represent the world’s third-largest crude reserves and make up the bulk of production from the country, the world’s fourth-largest producer. 

This month’s startup of the expanded Trans Mountain pipeline added capacity for an additional 590,000 bpd to be sent to the Pacific Coast for export, giving an industry that long faced a shortage of pipelines room to grow. But additional pipeline capacity will still be needed by as early as the beginning of 2026, when the added production fills up existing export lines, S&P said.

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