Oil sands output to increase despite cuts

OREANDA-NEWS. Canadian oil sands production is expected to rise steadily over the next three years, despite billions of dollars cut from overall spending, according to the National Energy Board.

Canada's energy regulator forecast approximately 1m b/d of bitumen production could be added from 2015 through 2018 from projects that have been recently completed or are currently under construction.

"Oil sands projects are expensive to build and can take three to four years to complete," the regulator said late yesterday in a market snapshot. "As a result, recently completed and nearing completion projects are expected to contribute to production increases in the coming years as they slowly grow their output towards planned capacities."

In its January 2015 production update, the Canadian Association of Petroleum Producers (CAPP) estimated oil sands volumes — bitumen and upgraded — would increase to 2.27mn b/d this year, from an estimated 2.13mn b/d last year.

North America's oil and gas industry has been reassessing its spending plans for 2015 on the heels of substantially reduced crude prices. In January CAPP estimated oil sands capital budgets would drop to C\\$25bn (\\$19.8bn) this year, down C\\$8bn (\\$6.4bn) from 2014.

Although existing oil sands operations, expansions and projects already under construction are not expected to falter, a number of proposed projects have been put on hold. The NEB estimates 527,500 b/d of planned bitumen production capacity has been taken off the market since last fall. This includes Cenovus' Foster Creek H and Christina Lake G expansions totaling 100,000 b/d, Shell Canada's 80,000 b/d Carmon Creek 3 and 4 expansions, Statoil's 80,000 b/d Corner project, and Canadian Natural Resources Limited's 40,000 b/d Kirby North.