Nearly 500,000 b/d of Canadian oil sands production will be added in 2017-18, growth only exceeded by US tight oil, according to IHS Markit’s outlook for Canadian oil sands production through 2026.
More modest but sustained growth is expected beyond 2019 as some of the impact of lower oil prices and falling investment is felt, with oil sands production at the end of 2026 about 1 million b/d higher than in 2017.
IHS Markit attributes the oil sands’ resilience to falling costs in existing operations and higher utilization rates as well as the completion of projects being constructed at the time of the price collapse.
A lack of material production declines from oil sands facilities—unlike other sources of supply—also makes growth more readily achieved than other forms of oil production, the information services firm notes.
“In recent years—even through lower prices—it was not uncommon for oil sands production additions to average more than 150,000 or even 200,000 b/d annually,” said Kevin Birn, energy director for IHS Markit. “Following 2019, modest additions beneath 100,000 b/d may be more common through the early part of the next decade.”
IHS Markit continues to expect oil sands growth to be dominated by expansions of existing facilities, which are lower cost, quicker to construct, and lower risk. More growth is also expected from existing operations as they minimize downtime and increase utilization.