Canada oilsands output to grow 42 per cent by 2025, mainly due to expansion of existing projects

Canada’s oilsands production will grow by 42 per cent 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 and Royal Dutch Shell to slam the brakes on sanctioning new oilsands 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 oilsands 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 oilsands plant has fallen by US$10 a barrel, and the least expensive project – expanding an existing thermal oilsands operation – could break even at a U.S. crude price of around US$50 a barrel.

U.S. crude was last trading at US$46.09 a barrel, after topping US$50 a barrel earlier this month for the first time in nearly a year.

© Thomson Reuters 2016

Canada oilsands output to grow 42 per cent by 2025, mainly due to expansion of existing projects: report

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