Like many people involved in the oilsands industry, I’m stuck on growth and I just can’t shake it. But I’m trying, because I have to, and it’s not so bad. I also have incredible hope for our future.
When we started Oilsands Review 10 years ago, oilsands production was just cresting one million bbls/d, thanks to a surge of growth after almost four decades of operators basically just chugging along.
Advances in technology, a cryptic outlook for oil supply and increasing oil prices had merged to propel a massive surge in new oilsands project investment that basically has not stopped—until now.
It has been more than two years since the price of oil collapsed, and it has also been more than two years since anyone sanctioned a new oilsands project. For the first time since Oilsands Review has been collecting project data, the list of projects under construction is not being replenished. As one falls off, there is not another to take its place on the spreadsheet.
Our competitors are beating us. As Shell Canada noted upon the cancellation of construction of its Carmon Creek in situ project in fall 2015, the oilsands “does not rank” compared to its other global opportunities due to high costs and struggles with market access.
Pipelines aside—and godspeed to good news—there are two things that our competitors cannot take away from us: our wall of cash flow and our practically unlimited potential upside.
The “wall of cash flow” is a phrase we’ve all heard that describes the long tail of benefit for a producer that follows the big upfront capital required to get an oilsands project going. But it’s not just good for the producer—decades of production designed without a decline curve offer incredible benefits for both the industrial operations supply chain and the people of Alberta and Canada, the owners of the resource.
It is simply not the same as when the conventional drilling crews go home.
What we’ve built, which will soon be three million bbls/d of oilsands production, isn’t going anywhere and is easily a $30 billion per year venture to maintain.
Which brings me to the upside—three million bbls/d of opportunity to improve efficiency, reduce costs and drop emissions, with every success potentially enabling more growth.
That’s just talking about our current technology suite—our capacity to meaningfully evolve beyond mining and SAGD is capped only by the vision and commitment to innovate held by our industry and government leaders.
And let’s not forget, according to the Canadian Association of Petroleum Producers (CAPP), growth is not over. CAPP’s most recent oilsands production forecast has the industry adding more than 600,000 bbls/d of new volumes between 2020 and 2030, which may not be the 1.6 million added between 2010 and 2020, but is still nothing to sneeze at. We’re just waiting for the first green shoot, which I am certain is coming in the near term.
We’re high-grading now, and that’s good, but this needs to include investment in both incremental gains and moon shots. The oilsands deserves nothing short of the very best that we can give.
