Report: Crude oil price crash to impede production growth of Canadian oil sands projects

A crash in commodity prices of crude oil is expected to delay Canadian oil sands projects planned for 2016–2025, according to a report by GlobalData.

Titled: ‘H2 2016 Production and Capital Expenditure Outlook for Key Planned Upstream Projects for Canadian Oil Sands – Crude Oil Price Crash Slows the Production Growth’ the report provides insights into the effect of the crude oil price crash in the fourth quarter of 2014 on the Canadian oil sands projects.

Oil sands production is expected to grow, but at a slower rate than estimated before the crash. The growth will further depend on the size of the resource, the secure demand for heavy crude oil in the US and the established industry in Alberta.

The majority of the projects planned during the 2016-2025 period will be expansions of already producing projects. The report has considered 17 key planned oil sands projects, 11 of which are expansions and six are new projects.

The biggest oil sands projects announced include Kearl Phase 3 with a capacity of 80,000 barrels of oil a day (bod) and Kearl Phase 4 Debottleneck with a capacity of 45,000bod. The two projects are expected to commence operations in 2016 and 2017 respectively.

In terms of operators, Cenovus Energy will lead with the maximum number of planned projects of five, including Narrows Lake, Foster Creek Phase G, Foster Creek Phase H, Christina Lake Phase F, and Christina Lake Phase G.

The key planned projects during the forecast period are expected to contribute 778,476bod of liquids production in 2025.

Canadian Natural Resources is expected to lead in terms of liquids production through its Horizon mining project. Total capital expenditure towards the key planned projects is estimated to be $78.1bn.

Projects that have already entered the construction phase may be delayed for a few years, the report adds.