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Canada Oilsands Outlook Gets First Upgrade in Five Years Amid Global Energy Crisis

Published 2023-05-26, 01:26 p/m
Updated 2023-05-26, 01:26 p/m
© Reuters.

By Ketki Saxena -- S&P Global (NYSE:SPGI) Commodity Insights has raised its outlook for Canada's oilsands for the first time in five years. The new forecast predicts that production will reach 3.7 million barrels per day (bpd) by 2030, up by half a million bpd from current levels and 140,000 more than last year's prediction.

This bullish revision comes as a response to the impact of higher oil prices, driven by the ongoing global energy crisis and the fallout from Russia's invasion of Ukraine 15 months ago. While it seemed that neither energy security fears nor higher crude prices were affecting oilsands production last year, the anticipated response to these factors has taken longer to materialize.

"Last year, we wrote that heightened energy security concerns (and higher prices) hadn't changed the outlook for Canadian oilsands. A year later, one might conclude that the response to higher prices just took longer than anticipated to have their usual effect," Calgary-based analysts Celina Hwang and Kevin Birn wrote in research published earlier this week.

The analysts at S&P Global Commodity Insights now predict that Canada will continue to post new record production and export levels in the coming years. "Looking to the future, Canada is expected to continue to post new record production and export levels," Hwang and Birn noted. 

However, production growth is expected to slow down in the late 2020s before entering a "shallow decline" phase in the early 2030s.

The upward revision is the first such adjustment in over half a decade and highlights the potential of Canada's oilsands sector amid the current energy landscape. The increased production forecast is particularly noteworthy given the industry's struggle with environmental concerns and the global push towards cleaner energy sources.

The recent rise in oil prices has prompted companies in the oilsands sector to ramp up production, taking advantage of favorable market conditions. This trend is expected to continue as long as oil prices remain elevated, providing a window of opportunity for Canadian producers to capitalize on global demand for crude.

Furthermore, Canada's oilsands industry is likely to benefit from ongoing geopolitical tensions and supply disruptions in other major oil-producing regions. As the world seeks to diversify its energy sources and reduce reliance on unstable regions, Canada's vast oilsands reserves may become an increasingly attractive option for global markets.

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