The International Energy Agency (IEA) says that Canadian oil production continues growing strongly despite constrained pipeline takeaway capacity.
Surging production in both the Canada and the U.S. accounted for a rise in non-OPEC volumes of approximately 2.1 million bbls/d in April compared to a year earlier, the IEA said this week.
The majority of that growth is coming from the U.S., but thanks to a handful of key major projects that recently came online, Canada’s production was about 200,000 bbls/d higher in Q1/2018 over Q1/2017.
This includes Suncor Energy’s Fort Hills oilsands mine and Canadian Natural Resources’ Horizon Phase 3 integrated oilsands mining and upgrading facility, as well as the Hebron offshore field.
“Canadian oil production held steady in March, near a record 5.2 million bbls/d, despite reports that oilsands producers scaled back output due to steep discounts for Canadian grades compared to WTI at Cushing,” the IEA said in its May Oil Market Report.
“Supply of non-upgraded oilsands rose by 42,000 bbls/d month-over-month to 1.8 million bbls/d — a new record — more than offsetting slightly lower output of upgraded production. Suncor’s Fort Hills likely contributed with the company announcing that the second of three extraction trains at the project became operational at the end of the quarter.
“Output likely fell sharply in April and May however, as maintenance at oilsands facilities intensified. Suncor has announced maintenance of both its U1 upgrader and the Syncrude facility in Q2/2018. The combined impact of the works is expected to curb output by about 110,000 bbls/d for the quarter, with the sharpest drop in April. Maintenance is also underway at Shell’s 255,000 bbl/d Scotford Upgrader.”
The maintenance has contributed to alleviating some of the pressure on pipeline export capacity, the IEA said.
“Indeed, the discount of WCS to WTI eased during April and May to $15/bbl from as high as $31/bbl reached in February, supported also by increased utilization of the Keystone Pipeline that had been running at reduced rates since late last year.”