IHS Markit, which provides independent, critical analysis and guidance on global business issues for worldwide investors, believes Canada’s oil sands are on a positive path for a rebound of production and ongoing reduction of greenhouse gas (GHG) emissions.
Production: recovering from COVID
An analysis released in August 2020 projected Canada’s oil sands production should hit nearly 3.8 million barrels per day (b/d) in 2030, representing an increase of nearly 1.1 million b/d from current levels.
Although oil sands’ overall output declined sharply in 2020 due to the pandemic and oil price shock earlier this year, IHS Markit sees the trajectory of oil sands production over the next decade should change little compared to pre-pandemic expectations. In fact, the firm pointed out that the 3.8 million-b/d projection for 2030 is just 2.6 percent lower than its pre-pandemic forecast of 3.9 million b/d.
Before the pandemic, oil sands output was already projected to undergo a decade of sustained but slow growth, IHS Markit noted, observing that insufficient pipeline capacity and price insecurity had disincentivized new large-scale investments in the oil sands industry. However, market access is expected to improve with the completion of the Trans Mountain Expansion Project, and post-pandemic energy demand should also recover. The firm predicts oil sands production to grow by more than 300,000 b/d by 2022.
Reducing emissions: another positive trend
In a separate analysis, IHS Markit determined that the combined GHG emissions intensity of Canadian oil sands projects fell by 20 per cent from 2009 levels, and is expected to decline by a further 16 to 23 per cent by 2030. Furthermore, declining emissions intensity in the oil sands will slow the pace of absolute emissions growth in Canada.
“The latest data show ongoing efficiencies and ramping-up of new, less-intensive forms of extraction will support additional GHG emissions intensity reductions though the next decade,” noted Kevin Birn, vice president, North American crude oil markets, IHS Markit.
The IHS Markit report, The GHG Intensity of Canadian Oil Sands: A New Analysis, is available to download at IHS Markit Oil Sands Dialogue.