Due to rapid technological developments in the exploration and production of oil sands, Canada has emerged as the world’s fourth largest producer of crude oil, behind the U.S., Russia and Saudi Arabia.
However, chronic midstream infrastructure bottlenecks and low price environment can limit the progress of the oil and gas industry, says GlobalData, a leading data and analytics company.
The company’s latest thematic report, Oil Sands reveals that backed by favorable government policy initiatives, oil sands production accounted for 67 per cent of total crude oil production of Canada in 2018.
Ravindra Puranik, Oil & Gas Analyst at GlobalData, says that, “With further improvements in technology and extraction processes, the oil sands industry could prove to be a major growth driver for the Canadian economy, similar to the recent shale boom in the U.S.”
GlobalData’s thematic research identifies companies such as Suncor Energy Canadian Natural Resources Ltd., Cenovus Energy, Imperial Oil (ExxonMobil) and Enbridge as the leading players in the oil sands industry in Canada.
“The growth in oil production in Canada is encountering the problem of chronic midstream infrastructure bottlenecks, amid delays in construction of new pipelines,” says Puranik. “The two major pipelines that were expected to ease the bottlenecks – Keystone XL and Trans Mountain – have been delayed indefinitely due to legal and regulatory setbacks.”
As the global demand for crude oil is expected to grow, particularly in Asia, the Canadian oil sands industry will continue to attract investments from all over the world.
“Nevertheless, considering the overall complexity of the oil sands extraction process, global prices for crude oil will have to remain at comparatively higher levels to ensure profitability from oil sands projects,” he concludes.
