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Canada oil sands output to grow 42 percent by 2025 -report

Published 2016-06-27, 01:38 p/m
© Reuters. Canada oil sands output to grow 42 percent by 2025 -report
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CALGARY, Alberta, June 27 (Reuters) - Canada's oil sands
production will grow by 42 percent to 3.4 million barrels per
day by 2025, most of which will come from the expansion of
existing facilities rather than new projects, analysts at IHS
Energy said on Monday.
The million-barrel-per-day increase in output over the next
nine years is less than what IHS would have estimated before the
collapse in global oil prices, spokesman Jeff Marn said.
Low crude prices have forced producers such as Cenovus
Energy CVE.TO and Royal Dutch Shell RDSa.L to slam the brakes
on sanctioning new oil sands plants, while all projects
currently under development will be completed by 2018, HIS said.
Future growth will have to come from so-called "brownfield"
expansions where costs have come down as a result of lower
construction activity, improved operating efficiencies and
cheaper natural gas.
"We expect oil sands producers to focus future investments
in the coming years onto their most economic projects - which we
expect to be expansions of existing facilities," said Kevin
Birn, director for IHS Energy.
"Expansions of existing facilities are better understood,
quicker to first oil and lower cost to construct," he added.
HIS estimates that since 2014, the cost of building and
operating a new oil sands plant has fallen by $10 a barrel, and
the least expensive project - expanding an existing thermal oil
sands operation - could break even at a U.S. crude price of
around $50 a barrel.
U.S. crude CLc1 was last trading at $46.09 a barrel, after
topping $50 a barrel earlier this month for the first time in
nearly a year.


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