By Peter Bergman (MoneyAmped.com)
The projected trajectory for Canada’s oil production indicates a notable increase of approximately 10 percent within the upcoming year, positioning it as a significant contributor to the global surge in supply.
Current Status and Forecasts
The nation’s crude oil production currently stands at approximately 4.8 million gallons per day, with projections indicating a potential increase of roughly 500,000 bpd, reaching an estimated 5.3 million bpd by the conclusion of 2024, as S&P Global Commodity Insights reported. The milestone above would represent a historical pinnacle in Canadian production.
The growth trajectory in Western Canada, particularly in Alberta’s oilsands, is projected to be significant. Additionally, there are anticipated increases in activity at offshore facilities close to Newfoundland and Labrador.
According to Kevin Birn, the senior analyst for Canadian oil markets at S&P, the figure of half a million represents a substantial amount. The magnitude of its production surpasses that of numerous countries on a global scale.
Reasons for Increased Oil Production
The anticipated significant increase in oil output within the forthcoming 12-14 months can be attributed, in part, to a reduction in overall production during the current year. This reduction is primarily due to the extensive maintenance obligations encountered at certain oilsands facilities.
The projected trajectory of the nation’s oil production indicates an imminent attainment of an unprecedented pinnacle, coinciding with the commencement of operations of the new Trans Mountain pipeline, which will facilitate the augmented oil transportation from Alberta to the Western seaboard. The ongoing construction of the expansion project will significantly enhance the pipeline’s capacity, increasing it from 300,000 barrels per day (bpd) to 890,000 bpd.
According to Birn, it has been observed that significant oilsands corporations are currently decreasing their expenditure to augment oil extraction from underground reservoirs. Instead, they focus on identifying strategies to enhance the operational efficiency of their current facilities while operating at maximum capacity.
However, it is essential to note that the individual above advises exercising caution about the sustainability of this current rate of production expansion, as it is anticipated to experience a decline and potentially stabilize by 2024.
For Birn, this particular event may serve as the final significant surge before the manifestation of a tangible deceleration in the expansion of supply within Western Canada. The observed phenomenon of plateauing becomes increasingly apparent in the temporal vicinity of 2025 and 2026.
The potential resumption of operations at the Terra Nova field, situated off the shores of Newfoundland and Labrador, is anticipated to take place in the upcoming year, notwithstanding the series of setbacks it has encountered.
Will Canada Be the Leader in Oil Production in 2024?
In 2024, Canada can emerge as a significant contributor to the global crude oil production landscape, potentially assuming the position of the main driver of growth in this sector. The country’s anticipated increase in oil production is estimated to be approximately 500,000 barrels per day (bpd), surpassing the projected growth of 400,000 bpd in the United States.
In other regions, the production levels in Guyana and Brazil may lead to a substantial growth of approximately 400,000 barrels per day (bpd) in the Latin American region during the upcoming year.
Based on a new study released by Deloitte Canada, it is anticipated that Canada’s projected growth in the upcoming two-year period will surpass the cumulative increase observed over the preceding five-year timeframe.
The Amount of Emissions Will Be Strictly Regulated
In the upcoming autumn, the federal government is poised to release preliminary regulations to establish emission limits for oil and gas production, subsequently enforcing a gradual reduction trajectory.
The oilsands comprise approximately 11 percent of Canada’s greenhouse gas emissions. In contrast, the remaining portion of the oil and natural gas industries collectively contribute to 15 percent of the nation’s emissions.
Based on an August evaluation published by S&P Global Commodity Insights, it was observed that total oilsands emissions remained unchanged in 2022 despite a marginal increase in production.
