Canada’s oil supply is expected to grow by 80 tb/d to average 4.39 mb/d in 2015 y-o-y, a downward revision of 0.06 mb/d from the previous month. Canadian oil output was revised up by 0.14 mb/d in 1Q15 due to strong output but all three next quarters was revised down by 0.22 mb/d in 2Q15, 0.07 mb/d in 3Q15 and 0.07 mb/d in 4Q15, respectively, compared to the last estimation, due to a wildfire in northeastern Alberta in May, which shut down around 233 tb/d of production at three oil sands projects. Canadian Natural Resources Ltd had also cut production at its nearby Kirby South thermal project to 12,000 b/d from around 30,000 b/d. Cenovus evacuated about 1,800 workers and shut down production at its Foster Creek oil sands site. In total, roughly 9% of Alberta’s crude output is offline (-0.25 mb/d from June) as a result of the fire, with no clear indication of when production can resume.
On the other hand, 25 well pairs are now on production at Sunrise oil sands project in northeastern Alberta. Strong reservoir and facility performance has contributed to increasing production volumes, averaging 5-5.5 tb/d at the end of June, which is ahead of schedule. According to Husky Chief Executive Officer, “Sunrise is one of many low sustaining capital projects in our near-term portfolio that is designed to provide increasing value through and beyond the current low oil price environment.” Bitumen production from Sunrise launched in March. Production is expected to increase to a full capacity of 60 tb/d by the end of 2016.
Canada’s average rig count in June increased by 48 units to 129 rigs, up by around 59% m-o-m, yet down by 111 rigs or around 46% y-o-y.
On a quarterly basis, Canada’s supply in 2015 is expected to average 4.59 mb/d, 4.16 mb/d, 4.35 mb/d and 4.47 mb/d, respectively.
Mexican liquids production in 2015 is expected to see a heavy decline, dropping by 0.20 mb/d, to average 2.60 mb/d. For the second straight month, oil production in Mexico declined m-o-m by over 0.15 mb/d to settle at 2.52 mb/d in April, which is lower y-o-y by 0.34 mb/d. Mexican state oil company Pemex recently reported an explosion related to an oil and gas leak on its Akal-H platform in the Bay of Campeche, which is one of the most productive areas of the Cantarell field. This comes barely two months after the fire at the Abkatun Permanente platform, which curtailed output at Ixtal, Homol and Chuc, but more importantly, crippled Mexico’s distribution network, resulting in Pemex reducing light and medium crude flows to Mexican refineries, and instead, diverting crude to export blends.
Heavy crude output fell y-o-y by 0.14 mb/d, with decline rates having doubled since May of last year. June has seen crude output pick up by a further 12 tb/d as output from Ixtal and Chuc continues to recover, with y-o-y declines easing to 0.18 mb/d. Mexico’s production declines increased in September of last year to over 0.1-0.15 mb/d, but following the fire at the Abkatun platform in April, y-o-y declines have steepened to over 0.3 mb/d. Just when output at the Ixtal and Chuc fields were in the process of recovering, Cantarell’s output is likely to fall, keeping total declines high.
On a quarterly basis, Mexico’s supply is seen to average 2.65 mb/d, 2.55 mb/d, 2.61 mb/d and 2.58 mb/d, respectively.