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Canada Oil Supply in March 2015

Source: OPEC 4/7/2015, Location: North America

Canada’s oil output is forecast to average 4.37 mb/d in 2015, revised up by 20 tb/d due to a base change in 2014, a proposed increase of 0.14 mb/d over the previous year and unchanged from the previous MOMR. The 2014 revision comes on the back of higher-than-expected output figures late in 4Q14, which were carried over to 2015. Despite the upward revision for 2014 supply estimates, Canada’s oil production outlook for 2015 remains unchanged compared with the previous month’s forecast for expected conventional oil, though output from unconventional sources will be gradually affected by sustained low oil prices. Nevertheless, the seven oil sands projects listed below, with a total capacity of about 400 tb/d (peak production), are currently planned for startup in 2015. Some small projects which are also candidates for exploitation have not been confirmed yet.

Syncrude’s production dropped by 40 tb/d in December, due to an outage at a sour water treater, but rose again by 48 tb/d m-o-m to 0.29 mb/d in January as technical problems eased. Nonetheless, January data indicates Canadian production fell by 30 tb/d m-o-m, likely attributable to inclement weather conditions which decreased output. Canadian oil sands projects exhibited significant sunken costs and came with lengthy payback periods, which should shield output from price declines. However, many companies have minimised their cash costs and some have delayed, postponed or cancelled future projects entirely. For instance, Statoil and CNRL are pushing back start-up dates at their Corner field and Kirby North oil sands facilities. Despite adding 0.40 mb/d of oil sands production from new projects in 2015, the forecast assumes 0.14 mb/d of growth for Canadian oil in the current year. On a quarterly basis, Canada’s oil supply in 2015 is expected to average 4.36 mb/d, 4.30 mb/d, 4.34 mb/d and 4.49 mb/d, respectively.

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