Market Snapshot: Oil Sands Production Likely to Continue Growing in the Short Term

Release Date: 2015-03-26

Current oil prices have resulted in many oil sands producers reassessing their spending plans for the coming year. The Canadian Association of Petroleum Producers estimated in January 2015 that oil sands capital budgets will fall to $25 billion in 2015, a decrease of $8 billion from 2014.

Despite the decrease in spending, bitumen production is expected to increase between 2015 and 2018. Oil sands projects are expensive to build and can take three to four years to complete. As a result, recently completed and nearing completion projects are expected to contribute to production increases in the coming years as they slowly grow their output towards planned capacities. In addition, projects under construction are not likely be halted.

The figure below depicts historical oil sands production as well as the capacities of new oil sands facilities that are in the process of ramping up their production. Oil sands facilities currently under construction which could begin producing in the next three to four years are also included. The oil sands production projection from the National Energy Board’s 2013 Energy Futures Report is also shown.

Figure Sources and Description

Sources: Oil Sands Review and various press releases and investor presentations.

Description: This line chart depicts historical and potential oil sands production from 2010 to 2018. Production grew from 1.6 million barrels per day in 2010 to 2.3 million barrels per day in 2014. Starting in 2015, a wedge depicts the bitumen volumes associated with oil sands projects that have been constructed and will be ramping up production over the 2015 to 2018 timeframe. This wedge represents 0.54 million barrels per day and is added to total production in 2014. Another wedge, starting in 2017, depicts bitumen volumes associated with projects currently under construction that could add to oil sands production in 2017 and 2018 and totals nearly 0.5 million barrels per day. Adding the two wedges to 2014 volumes, potential production could reach 3.3 million barrels per day by 2018. Also depicted is the National Energy Board's 2013 Energy Futures oil sands production projection, which grows from 2.3 million barrels per day in 2014 to 3.1 million barrels per day in 2018.

Approximately one million barrels per day of bitumen production could potentially be added over the 2015 to 2018 timeframe from projects that have been recently completed or are currently under construction. However, lower oil prices, among other factors, have already affected several other projects that are not as far along in their development. The table below details some recently deferred oil sands projects.

Major Oil Sands Projects Deferred after the Second Quarter of 2014
Major Oil Sands Projects Deferred
after the Second Quarter of 2014
(greater than 20,000 barrels per day)
Capacity
(barrels
per day)
Cenovus - Foster Creek (H) and Christina Lake (G) 100,000
Cenovus - Telephone Lake and Grand Rapids 55,000
Cenovus - Narrows Lake 45,000
Statoil - Corner 80,000
Suncor - MacKay River Phase 2 20,000
Husky - Sunrise Phase 2 70,000
Shell - Carmon Creek 3 and 4 80,000
Pengrowth - Lindbergh Phase 2 37,500
Canadian Natural Resources - Kirby North 40,000
Total 527,500
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