More increased oil prices are ultimately lifting the observatory for Canada’s oilsands, 15 months after Russia’s attack on Ukraine, leading to S&P Global Commodity Insights’ first positive output revision in more than five years.
“We reported last year that the outlook for Canadian oilsands had not changed despite increased energy security concerns (and higher costs). One could draw the conclusion that the reaction to rising pricing just took longer than expected to take effect, Calgary analysts Celina Hwang and Kevin Birn said in a study that was released earlier this week.
According to S&P Global Commodity Insights, oil sands output would increase by around 140,000 barrels per day from last year’s forecast to 3.7 million barrels per day by 2030. According to the study, that equates to 500,000 barrels per day more than what is now produced.
Hwang and Birn continued, “Looking to the future, Canada is expected to continue posting new record levels of production and exports.”
The lengthy and flat production profile of typical Canadian oilsands assets is reflected in their forecast of production growth slowing in the late 2020s before starting to “shallow decline” in the early 2030s.
The U.S. benchmark price of crude oil is expected to rise above US$100 per barrel by late summer before soaring to more than US$115 in 2024, according to London-based research firm Energy Aspects. However, concerns about the U.S. debt ceiling and weaker economic conditions have been weighing on crude prices.
According to Hwang and Birn, oilsands producers are investing more money than ever before as a result of higher prices, and this trend is expected to last as long as prices rise.
According to Canada’s main fossil fuel industry group, spending on oil and gas production would increase by 11% to $40 billion in 2023.
According to Lisa Baiton, president and CEO of the Canadian Association of Petroleum Producers, “the year 2023 may be one of the most critical junctures in time for Canada’s oil and natural gas industry.”
