IHS Markit Oil Sands 10-Year Production Forecast: Nearly Half Million Barrels Per Day Production to be Added Over Next Two Years and Continue at More Measured Pace Thereafter
IHS Markit (NYSE: INFO), a world leader in critical information, analytics and solutions, has released its outlook for Canadian oil sands production through 2026. IHS Markit expects large production growth through 2019—making Canada the second largest source of global supply growth during that time. More modest, but sustained growth is expected beyond 2019, with oil sands production at the end of 2026 around one million bpd higher than in 2017.
An analysis of the new IHS Markit oil sands production forecast by Kevin Birn, director for IHS Energy, is available at the IHS Markit Energy Blog.
Oil sands production has proved resilient and has notched significant growth despite the collapse in oil prices three years ago. IHS Markit attributes this to decreasing costs in existing operations and higher utilization rates as well as the completion of the projects being constructed at the time of the price collapse. A lack of material production declines from oil sands facilities—unlike other sources of supply—also makes growth more readily achieved than other forms of oil production.
These factors are expected to continue to drive large production additions through 2017-2019. Starting in 2019, additions will begin to slow. Growth will continue, but at a slower pace because of the long aftershock of lower prices and falling investment since the 2014 price collapse. The long lead time of oil sands projects means the impact of lower oil prices will impact supply additions into the early part of the next decade.
“In recent years—even through lower prices—it was not uncommon for oil sands production additions to average more than 150,000 or even 200,000 barrels per day annually,” said Kevin Birn, energy director for IHS Markit. “Following 2019, modest additions beneath 100,000 barrels per day may be more common through the early part of the next decade.”
IHS Markit continues to expect oil sands growth to be dominated by expansions of existing facilities, which are lower cost, quicker to construct and lower risk. More growth is also expected from existing operations as they minimize downtime and increase utilization.
However, the potential exists for further technological innovation to alter the course of oil sands production in the future, Birn said.
“The oil sands has always been a story of innovation and it is too soon to rule out the potential for technology to change the game in the oil sands.”
Analysis of the new IHS Markit oil sands production forecast at the IHS Markit Energy Blog, available at http://on.ihs.com/2sAnW3b.
All other Oil Sands Dialogue research by IHS Markit is available at www.ihs.com/oilsandsdialogue.
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