Latest forecast expects oil sands production
in 2030 to be 3.7 million barrels per day—half a million barrels
per day higher than current levels
CALGARY, AB, May 25, 2023
/PRNewswire/ -- Higher crude prices and continued optimization
improvements have driven the first upward revision to the S&P
Global Commodity Insights 10-year oil sands production outlook in
more than half a decade.
The new forecast, produced by the S&P Global Commodity
Insights Oil Sands Dialogue, expects Canadian oil sands production
to reach 3.7 million barrels per day (mbd) by 2030—half a million
barrels per day higher than today. The new projection represents an
increase of 140,000 b/d in 2030 from
the previous outlook.
"Higher oil prices have driven record returns for the Canadian
oil sands," said Celina Hwang,
Director, North American Crude Oil Markets, S&P Global
Commodity Insights. "Although producers continue to demonstrate
capital discipline, stronger balance sheets are now giving oil
sands companies renewed confidence in regard to their intentions
for capital spending."
The main driver of the upward revision has been the
identification of additional opportunities to improve efficiency
and/or optimize output, the analysis says. The ongoing ramp-up and
operational efficiency gains from learning by doing and step-out
optimization projects are the most significant contributors.
Step-out optimizations are a relatively new phenomenon and
include, as the name suggests, stepping out from existing
operational areas into new high quality adjacent lands.
Capital expenditures for oil sands production in 2022 reached
their highest levels since 2015 and could rise further this year.
However, most of that increase occurred to offset increased
inflation and there has not been a resurgence in large-scale
greenfield or even brownfield oil sands projects, the analysis
says.
"The Canadian oil sands have entered an 'era of optimization',"
said Kevin Birn, Vice President,
Canadian Oil Markets Chief Analyst, S&P Global Commodity
Insights. "Learning by doing and step-out optimizations account for
nearly 90% of our overall production outlook. The remainder of
additions are expected to come from yet another form of
optimization—debottlenecking projects. Optimizations now dominate
the S&P Global Commodity Insights oil sands production growth
outlook."
S&P Global Commodity Insights expects Canada to continue to post record crude oil
production (both oil sands and non-oil sands crude) and export
levels annually for the remainder of this decade. A deceleration in
growth is expected to begin around the mid to late 2020s, but a
very shallow decline only begins to emerge in the early 2030s. The
reasons that the decline is expected to be particularly shallow is
due to the long, flat production profile of Canadian oil sands
assets.
Continued upside potential exists for the production outlook
given the organic nature of how optimization projects emerge, the
analysis says. Policy remains the most likely source of downside
risk. In particular, the advancing federal oil and gas cap which
intends to establish an absolute oil sands emissions target could
temper investment if the targets prove too stringent and
unattainable in the time provided, the analysis says.
"When oil prices were last at the levels experienced in 2022,
the oil sands experienced a surge in development," Birn said.
"Today, with over 3.2 million barrels per day of output, the
optimization of that large existing base of assets can lead to
material additions—all while maintaining capital discipline sought
from upstream oil and gas investors."
Media Contacts:
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Jeff.marn@spglobal.com
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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