8.6 C
New York
Sunday, August 1, 2021
Home Business Regardless of COVID, the outlook for the oilsands gets a bit dimmer...

Regardless of COVID, the outlook for the oilsands gets a bit dimmer year after year


The latest forecast for future growth in the oilsands was released Tuesday and continued a trend over most of the last decade of industry experts having a less optimistic outlook for the sector.

The new report by IHS Markit expects oilsands production to reach 3.8 million barrels per day of oil in 2030, compared to last year’s projection of production climbing to 3.9 million.

It’s a relatively small change to the forecast the firm released in 2019, but yet another revision downward. That pattern has occurred just about every year since 2014, when the main oilpatch industry group had forecast oilsands output climbing to 4.8 million barrels per day by 2030.

By 2016, the Canadian Association of Petroleum Producers had lowered its 2030 forecasts further to project growth to reach 3.7 million barrels per day.

For context, oilsands production at the beginning of this year was about 2.9 million barrels per day.

A comparison of the latest IHS oilsands production outlook to the forecast released last year. (IHS Markit)

Analysts with IHS Markit lowered their latest forecast slightly predominantly because of pipelines. There is doubt about when and if new export pipelines will be built and that uncertainty will weigh on the confidence level of companies to invest significant funding to build new oilsands facilities.

Some projects like the Trans Mountain expansion have overcome court challenges and continue to get built, while other projects like TC Energy’s Keystone XL face new roadblocks and further delays to construction.

“They continue to move forward and backward,” said Kevin Birn, a Calgary-based analyst with IHS, in an interview.

“I think you could say they are generally getting closer to completion, but from an investment standpoint, I think what producers and investors in the sector are looking for is greater certainty and they are waiting to see these things get to the final leg.”

The report points to most of the growth over the next decade coming from companies returning to full operations, finding optimization and debottlenecking, and completing projects that were already underway, but were put on hold.

Only about a third of the anticipated growth in the next decade will be from new facilities and expansion projects.

Of the expected growth in oilsands production over the next decade, only a fraction of it is expected to result from the construction of new facilities. (IHS Markit)

COVID-19 has no doubt had an impact on the oilsands, but its likely only a short-term challenge and won’t change the long-term health of the sector.

Last week, Canadian oil producers began reporting their second quarter financial results and are again posting billions of dollars in losses as a result of the pandemic.

Besides added debt levels, many companies have slashed spending and delayed expansion plans.

Even with oil prices stabilizes in recent weeks bringing some profitability back to the sector, many oil producers are still uncertain about what the next year may look like.

“Uncertainty is high,” said Suncor Energy chief executive officer Mark Little, during a conference call with investment analysts last week.

“You’ve seen all sorts of, across North America, economies starting and stopping, re-starting, so I think the jury is still out and there are a lot of things that need to be resolved before we get back to what we thought was normal. So, our whole focus is to maintain flexibility.”

The pandemic has resulted in a drop in demand for fuels, especially jet fuel. One reason the pandemic isn’t having much of an impact on long-term projections for the oilsands is because the sector has faced major disruptions in the past and bounced back relatively quickly.

For instance, many facilities had to shutdown and completely evacuate in 2016. Still, on an annualized basis, oil production still increased more than the previous year.

If the pandemic’s impact on fuel demand drags on beyond analyst expectations, it could have an impact on oilsands growth projects. Another variable is environmental pressures on the sector, according to the IHS report.



Source link

Today news
Today News 1 runs four of the western GTA’s most influential media websites, offering news, food, lifestyle and entertainment coverage for millions to the Golden Horseshoe and GTA regions. The independently-run, online news source was founded in 2019 and specializes in everything from breaking news to food and restaurant, arts and entertainment and lifestyle coverage.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

- Advertisment -

Most Popular

Oilpatch revival underway with robust profits so far this year

After racking up debt in 2020, the Canadian oilpatch is enjoying a rebound so far this year as major oil producers are gushing...

Business travel isn’t expected to return to pre-pandemic levels anytime soon

Kacey Siskind recently took her first business trip to the U.S. since the pandemic began.  The vice-president of business development at Honk Mobile, a...

Pop star Kris Wu detained by Beijing police on suspicion of sexual assault

Chinese-Canadian pop star Kris Wu has been detained by Beijing police on suspicion of rape, police announced Saturday, following an accusation the former...

Barenaked Ladies ready to return to stage after a Detour de Force

Among the four current members of Barenaked Ladies, there are differing feelings about returning to the stage. There is the predictable excitement, but...

Recent Comments