Report: Canada Oil Sands Output to Grow 42% by 2025
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 and Royal Dutch Shell to slam the brakes on sanctioning new oil sands plants, while all projects currently under development will be completed by 2018, IHS 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.
IHS 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 was last trading at $46.09 a barrel, after topping $50 a barrel earlier this month for the first time in nearly a year.
(Reporting by Nia Williams; Editing by Alan Crosby)
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Shell Agrees to $1.9B Sell of Upstream Danish Assets to Noreco (Oct 17)
- Tight Oil, Shale to Drive Majors' Output to New Highs (Oct 16)
- Shell, Equinor Commit to Tanzania LNG as They Await Host Accord (Oct 16)