10-year oil sands forecast mostly will hold true: IHS Markit
A new report predicts Canadian oil sands production will have its biggest annual decline on record this year, dropping by an average of nearly 175,000 barrels per day due to issues associated with the COVID-19 pandemic.
But research firm IHS Markit told Canadian Press the step back in 2020 isn’t expected to greatly affect the rest of its 10-year forecast.
It says it expects oil sands production to reach 3.8 million barrels per day by 2030, down slightly from a previous forecast for 3.9 million bpd, but still a 1.1 million bpd increase from the 2020 projected production.
Oil sands production is anticipated to rise over the second half of 2020 and into 2021 as barrels curtailed due to low prices come back online and capacity that has never been fully utilized ramps up.
It says oil sands output by 2022 could be 300,000 bpd higher than in 2019 if the Alberta government eases its oil curtailment program introduced in early 2019 to better align production with limited pipeline takeaway capacity.
It says most of the growth in production will come from small investments in projects where some capital has already been deployed — less than a third will come from new greenfield operations or project expansions.
“Despite the COVID-induced shocks of 2020 the longer-term expectations for Canadian oil sands are not far off from what was expected prior to the pandemic,” said IHS vice-president Kevin Birn. “The scale of installed production capacity that exists today, the lack of material production declines from existing operations in the medium-to-long term and the ability to optimize and leverage current operations support growth.”