Ten-year production outlook for Canadian oil sands raised again by S&P Global

Canadian oil sands could yield half a million barrels per day more than current output according to S&P Global Commodity Insights.

The energy and commodities information provider on Thursday revealed it had raised its 10-year production outlook for the second consecutive year, to reach 3.8 million mbd by 2030.

This latest projection represents an increase of nearly 100,000 b/d - 3% - in 2030 from the previous outlook. 

Additional output

The refreshed figure also marks the first time S&P Global has made public its outlook to 2035, where initial declines in production begin to emerge.

S&P Global Commodity Insights Oil Sands Dialogue attributes the increased projection to the ongoing focus of producers on maximising existing assets through investments in optimisation and efficiency.

It said such projects tended to be more capital efficient, quicker to complete, and often contributed to greater reliability and lower cost, as well as higher output.

Continuing growth 

Celina Hwang, Director of North American Crude Oil Markets at S&P Global Commodity Insights, commented that oil sands production continued to grow despite concerns about the advancing federal oil gas emissions cap’s potential impact on production. 

“Producers have displayed a blend of discipline and adaptability with an ongoing focus on maximising existing assets through optimisation and efficiency while maintaining stronger balance sheets from comparatively higher oil prices,” she said

Production increased 1.3 million b/d during the past decade, and an extended period of comparatively higher oil prices in recent years is leading to more ambitious oil sands projects - several with the potential to increase output by more than 20,000 b/d each. 

Anticipating headwinds 

The analysis said these emerging projects were still primarily focused on leveraging existing infrastructure, rather than large greenfield projects.

Headwinds exist over the longer term, however, that contribute to a plateauing of oil sands production towards the decade-end. Then the inventory of potential optimisations may slow and uncertainty posed by the oil and gas emissions cap is expected to add additional hesitation to larger-scale production-focused investments.

Kevin Birn, Vice President, Canadian Oil Markets Chief Analyst and Head of Center for Emissions Excellence, S&P Global, said potential for further optimisations exists, but they are not infinite.

Adapting to change

He explained: “There is only so much that you can optimise, and those projects are often harder to foresee because many are the result of learning by doing.

“Large-scale carbon capture and storage, which the industry has committed to implementing, will also add complexity to larger investments in incremental production from a capital allocation and project execution standpoint.”

Export capacity is expected to continue to present a challenge in coming years, the analysis suggested. Despite recent completion of the Trans Mountain pipeline expansion (TMX), regional price volatility could reemerge without new pipelines or further optimisation of existing ones. 

Investment uncertainty

S&P Global Commodity Insights balances indicated that additional export capacity may be required online as soon as early 2026 to ensure the system remains balanced on pipeline economics. 

“It has been clear from our analyses for some time that hopes for a new age of price stability in western Canada are unlikely to be achieved with TMX alone,” added Birn. 

“Higher output has raised demand for export capacity, and new pipeline capacity is increasingly rare. That means additional uncertainty for large-scale production investments in the region.”