Market Snapshot: Oil Sands Production to Increase, but Effects of Low Oil Prices are Evident
Release date: 2015-12-15
In November of 2015, estimated production from Canada’s oil sands reached 2.5 million barrels per day (MMb/d) of crude oil and equivalent, representing 60 per cent of Canada’s total oil production of 4.1 MMb/d. Over the next five years, oil sands production is forecast to increase by over 0.8 MMb/d, reaching 3.3 MMb/d in 2020.
The graph below shows that in situFootnote 1 production will be responsible for the majority of the increase. Mining will also increase, due to the ramp-up of Phase 2 of Imperial Oil’s 220 thousand barrels per day (Mb/d) Kearl mine as well as the 2017 startup of Suncor Energy and partners’ 160 Mb/d Fort Hills project.
Figure Source and Data
Source: NEB
Description: The chart shows historical oil sands production and forecasted production to 2020, broken out by type of production, mining and in situ. The forecast was arrived at by taking into consideration currently operating projects as well as projects expected to begin production by 2020.The expectation is that overall oil sands production, which was less than 0.7 million barrels per in 2000 will reach 3.3 million barrels per day in 2020.
Despite the forecast increase in overall production, lower oil prices have had a marked effect on oil sands projects. Shell Canada’s decision in October of this year to cancel its 80 000 barrels per day in situ Carmon Creek project was notable, as unlike most deferred projects, it was already under construction. It was the latest in the list of many similar decisions since 2014 that have slowed the pace of oil sands development. Over 700 Mb/d of production from oil sands projects has been deferred or cancelled outright. The table below outlines some of these projects.
| Company | Project | Capacity (Mb/d) |
|---|---|---|
| Cenovus | Foster Creek J & Christina Lake H | 100 000 |
| Cenovus | Telephone Creek and Grand Rapids | 55 000 |
| Cenovus | Narrows Lake | 45 000 |
| Statoil | Corner | 80 000 |
| Suncor | MacKay River | 20 000 |
| Husky | Sunrise Phase 2 | 70 000 |
| Shell Canada | Carmon Creek Phases 1&2 | 80 000 |
| Shell Canada | Carmon Creek Phases 3&4 | 80 000 |
| Pengrowth | Lindbergh Phase 2 | 37 500 |
| CNRL | Kirby North | 40 000 |
| Imperial | Kearl Mine debottleneck | 100 000 |
| Total | 707 500 | |
| Sources: Company Websites | ||
In addition to project deferrals and cancellations, many companies have made revisions to their oil sands capital spending. In some cases, the decreased spending is at least partially due to cost reductions achieved through improved process and operational efficiencies. Overall the amount of money being spent by companies to build or expand major oil sands projects is estimated to be roughly $15 billion in 2015, a decline of over 30 per cent compared to 2014.
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