A new report released by global research and consulting firm GlobalData revealed that oil sands projects in Canada will see capital expenditure (CapEx) of $40.6bn out of a total $82.8bn between this year and 2025.
Over the past year, several oil sands projects have experienced delays and cancellations, but the production of oil sands in Canada is set to continue its path of growth with plans for six new and 11 expansion projects.
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The report, titled ‘Production and Capital Expenditure Outlook for Key Planned Upstream Projects for Canadian Oil Sands’, states that the growth will be supported by the size of the resource, the industry in Alberta, and the secure demand for heavy crude oil in the US refining market.
GlobalData senior upstream analyst Adrian Lara said: “There is a real opportunity for increasing oil sands refining market share in the US and Gulf of Mexico, as the decline in the production of traditional suppliers of heavy crude such as Mexico and Venezuela leaves complex refineries needing to draw the supply from other reliable sources such as Alberta.”
Key oil sands planned projects are expected to contribute 715,000 barrels of oil per day (bod) of incremental supply by 2023.
Cenovus Energy will lead in terms of operatorship of planned Canadian oil sands projects and is expected to operate five projects such as Narrows Lake, Foster Creek Phase G, Foster Creek Phase H, Christina Lake Phase F, and Christina Lake Phase G.
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By GlobalDataIn addition, Canadian Natural Resources, Husky Energy, Pengrowth Energy and Suncor Energy are set to operate two projects each.
At present, Kearl Phase 3 with a capacity of 80,000bod and Kearl Phase 4 Debottleneck with a capacity of 45,000bod are on hold and expected to start operation this year and next year respectively.
GlobalData upstream analyst Alexandra Pais said: “In mid-2016, the West Canadian Select crude price remains below $35 per barrel.
“While the breakeven of a new oil sands project without prior investment varies between $40 and $60, the breakeven of an expansion phase already in construction such as Foster Creek phase G is approximately $25 per barrel.”
