Longer-Term Outlook for Canadian Oil Sands Changes Little Despite “COVID-19 Shock” & Largest Annual Production Decline in...
July 28 2020 - 9:12AM
Business Wire
IHS Markit 10-year forecast expects oil sands production to be
nearly 3.8 million barrels per day in 2030, compared to 3.9 million
projection prior to COVID-19
Canadian oil sands production is expected to decline by nearly
175,000 barrels per day (b/d) in 2020 as a result of COVID-19—the
largest annual decline on record. However, the longer-term
trajectory of oil sands production is expected to change little
compared to pre-pandemic projections, according to a new 10-year
forecast by IHS Markit (NYSE: INFO), a world leader in critical
information, analytics and solutions.
The new forecast by the IHS Markit Oil Sands Dialogue, which
takes into account the “COVID-19 shock,” projects Canadian oil
sands production to reach 3.8 million barrels per day (MMbd) in
2030—nearly 11 MMbd higher than 2020 levels. The previous IHS
Markit forecast expected production to reach 3.9 MMbd in 2030.
Prior to COVID-19, the coming decade was already expected to be
one of sustained-but-slower growth for the oil sands, with
transportation constraints such as a lack of adequate pipeline
capacity and the resulting sense of price insecurity in western
Canada weighing on new large-scale incremental investments.
“The impact of COVID-19 has changed the reason for a period of
lower investment in the oil sands not necessarily the direction of
long-term expectations,” said Celina Hwang, senior analyst, IHS
Markit focused on western Canadian supply. “Recent reductions,
albeit dramatic, are likely to be only temporary and curtailed
output is expected to return.”
Oil sands production is anticipated to rise over the back half
of 2020 and into 2021 as curtailed production comes back online and
existing installed capacity that has never been fully utilized
ramps up. Should the Government of Alberta ease it’s regulated
curtailment, by 2022 oil sands output could rebound from its
COVID-induced declines to more than 300,000 b/d higher than 2019
levels.
Production would then proceed along a trajectory close to prior
expectations, with most production growth to 2030 coming from
COVID-19 recovery and ramp-up of already existing production
capacity.
About half (over 500,000 b/d) of the rise in production is
expected to come from incremental investments in new capacity—the
majority of which will come from projects where some capital has
already been deployed. Less than a third of anticipated growth to
2030 is expected to come from new projects that include entirely
new greenfield operations or projects to expand existing
facilities.
The IHS Markit forecast notes that remaining uncertainties in
the global recovery from COVID-19 and the status of western
Canadian pipeline capacity could shift the trajectory of oil sands
production in the future. But previous projections for long-term
production growth remain largely intact under current
conditions.
“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 Kevin Birn, vice president,
IHS Markit who heads the Oil Sands Dialogue. “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.”
A fuller analysis of the new IHS Markit oil sands production
forecast is available at the IHS Markit energy blog.
Previous Oil Sands Dialogue research is available to download at
www.ihsmarkit.com/oilsandsdialogue.
About IHS Markit
(www.ihsmarkit.com)
IHS Markit (NYSE: INFO) is a world leader in critical
information, analytics and solutions for the major industries and
markets that drive economies worldwide. The company delivers
next-generation information, analytics and solutions to customers
in business, finance and government, improving their operational
efficiency and providing deep insights that lead to well-informed,
confident decisions. IHS Markit has more than 50,000 business and
government customers, including 80 percent of the Fortune Global
500 and the world’s leading financial institutions. Headquartered
in London, IHS Markit is committed to sustainable, profitable
growth.
IHS Markit is a registered trademark of IHS Markit Ltd. and/or
its affiliates. All other company and product names may be
trademarks of their respective owners © 2020 IHS Markit Ltd. All
rights reserved.
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Jeff Marn IHS Markit +1 202 463 8213 Jeff.marn@ihsmarkit.com
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