The reality of a slower pace of investment and growth in Canada’s oilsands industry is taking shape, the leader of IHS Markit’s Oil Sands Dialogue said on Thursday.
A new production forecast by Kevin Birn projects that oilsands volumes will grow by approximately 100,000 bbls/d annually over the next ten years, down from the current decade, when annual growth regularly averaged in excess of 150,000 bbls/d.
Growth going forward is expected to be driven by expansions to existing projects and new construction projects where some field work has been completed but the project has been put on hold.
Total production is expected to increase by nearly one million bbls/d by 2030 to almost 4 million bbls/d, but that is down substantially from the last five years, when oilsands production grew by almost 750,000 bbls/d, Birn noted.
He added that the issue is transportation constraints such as a lack of adequate pipeline capacity, and the resulting sense of price insecurity.
“Ironically the call on Canadian heavy sour crude oil—the principal export from the Canadian oilsands—has never been greater as the rapid deterioration of Venezuelan output tightens the supply of heavy sour crude globally,” he said.
“The key to unlocking further upside growth potential in the Canadian oilsands 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.”
Image: Cenovus Energy