Latest forecast expects oil sands production
in 2030 to be 3.8 million barrels per day—half a million barrels
per day higher than current levels
CALGARY,
AB, May 9, 2024 /PRNewswire/ -- S&P
Global Commodity Insights has raised its 10-year oil sands
production outlook for the second consecutive year. The updated
forecast expects Canadian oil sands production to reach 3.8 million
barrels per day (mbd) by 2030—half a million barrels per day higher
than today. The new projection represents an increase of nearly
100,000 b/d (or 3%) in 2030 from the
previous outlook. This also marks the first time S&P Global is
making public its outlook to 2035 where initial declines in
production begin to emerge.
The new forecast, produced by the S&P Global Commodity
Insights Oil Sands Dialogue, attributes the increased projection to
producers' ongoing focus on maximizing existing assets through
investments in optimization and efficiency. Such projects tend to
be more capital efficient, quicker to complete, and often
contribute to greater reliability and lower cost as well as higher
output.
"Oil sands production continues to grow despite concerns about
the advancing federal oil gas emissions cap's potential impact on
production," said Celina Hwang,
Director, North American Crude Oil Markets, S&P Global
Commodity Insights. "Producers have displayed a blend of
discipline and adaptability with an ongoing focus on maximizing
existing assets through optimization and efficiency while
maintaining stronger balance sheets from comparatively higher oil
prices."
Oil sands production has increased 1.3 million b/d during the
past decade. An extended period of comparatively higher oil prices
in recent years is leading to more ambitious projects, with several
advancing with potential to increase output by more than
20,000 b/d each. These projects are
still primarily focused on leveraging existing infrastructure
rather than large greenfield projects, the analysis says.
Over the longer-term, headwinds do exist that contribute to a
plateauing of oil sands production towards the end of the decade
when the inventory of potential optimizations may slow and the
uncertainty posed by the oil and gas emissions cap is expected to
add additional hesitation to larger scale production-focused
investments, the analysis says.
"The potential for further optimizations exists but they are not
infinite. There is only so much that you can optimize, and those
projects are often harder to foresee because many are the result of
learning by doing," said Kevin
Birn, Vice President, Canadian Oil Markets Chief Analyst and
Head of Center for Emissions Excellence, S&P Global.
"Large-scale carbon capture and storage, which the industry has
committed to implementing, will also add complexity to larger
investments in incremental production from a capital allocation and
project execution standpoint."
Export capacity is expected to continue to present a challenge
in the coming years. Despite the recent completion of the Trans
Mountain pipeline expansion (TMX), regional price volatility could
reemerge without new pipelines or further optimization of existing
ones, the analysis says. S&P Global Commodity Insights balances
indicate that additional export capacity may be needed online as
soon as early 2026 to ensure that the system remains balanced on
pipeline economics.
"It has been clear from our analyses for some time that hopes
for a new age of price stability in western Canada are unlikely to be achieved with TMX
alone," said Birn. "Higher output has raised demand for
export capacity, and new pipeline capacity is increasingly rare.
That means additional uncertainty for large-scale production
investments in the region."
Media Contacts:
S&P Global: Jeff Marn +1-202-463-8213,
Jeff.marn@spglobal.com
S&P Global Commodity Insights, Global/EMEA: Paul Sandell +
44 (0)7816 180039, paul.sandell@spglobal.com
Americas: Kathleen Tanzy + 1
917-331-4607, kathleen.tanzy@spglobal.com
Asia: Melissa Tan
+ 65-6597-6241, melissa.tan@spglobal.com
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SOURCE S&P Global Commodity Insights