ESAI Energy forecasts growth from the Canadian Oil Sands will be a substantial 250,000 b/d in 2018, but as producers face challenges associated with relatively high costs in a recovering oil price environment, Oil Sands projects in the next few years will be leaner and smaller. In the recent issue of ESAI Energy's North America Watch, the firm projects that growth from the region will decelerate to 120,000 b/d in 2019.
ESAI Energy says that with oil prices recovering, but still below $60 for WTI, producers in the Canadian Oil Sands are being selective in their allocation of capital to growth projects. The 190,000 b/d Fort Hills mine, due by the end of the year, might be the last greenfield mining project in the Oil Sands for a number of years. Operators are experimenting with solvents and new processes that have the potential to reduce both costs and emissions, but new greenfield projects are unlikely to go forward until after 2020. ESAI Energy expects incremental growth will continue from expansions to existing SAGD projects that require less initial outlay of capital and that can come online in less time.
Pipeline capacity to accommodate production growth is also proving to be elusive as lengthy regulatory reviews and court challenges delay projects. Current takeaway capacity for surplus Canadian crude remains constrained until the Line 67 expansion comes online in late 2018, and provides some temporary relief. ESAI Energy's Elisabeth Murphy explains, however, that “Even with decelerating growth in 2019, additional capacity beyond the Line 67 expansion will be needed to accommodate production growth after 2019”.
About ESAI Energy LLC: Energy Security Analysis, Inc. (ESAI), founded in 1984, is a global energy consulting company that provides market research and strategic advisory services. ESAI Energy LLC provides outlooks ranging from 1-week to 25-years and a proprietary framework for interpreting and prioritizing empirical market data and industry information. ESAI Energy's detailed analysis of energy markets identify and explain future market trends and opportunities for energy and energy dependent companies.
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