Oil supply in Canada is expected to grow by 0.05 mb/d in 2015 to average 4.36 mb/d
y-o-y, a downward revision of 40 tb/d from the previous month. Final June data shows
conventional output fell in June by 0.17 mb/d y-o-y to 1.19 mb/d, the lowest level since
August 2012. Moreover, output of NGLs declined to 0.69 mb/d. The onshore rig count
fell to just 70 rigs in September, lower y-o-y by 152, suggesting conventional declines
Preliminary estimates place July Canadian output lower m-o-m by 70 tb/d to average
4.23 mb/d. In June, output from Canada’s oil sands increased by 0.43 mb/d to settle at
2.41 mb/d, driven by a 90 tb/d y-o-y increase in Syncrude's joint-venture upgrader
production. While August saw Canadian output remain flat m-o-m, production from
Syncrude's 0.33 mb/d upgrader likely declined by 0.2 mb/d in September, due to an
unplanned outage. This has been further compounded by reduced rates at Nexen’s
Long Lake upgrader. It was forced to cut output by the Alberta Energy Regulator,
following a safety inspection which revealed unsafe pipelines.
Canadian output in 2Q15 was lower y-o-y by 60 tb/d at 4.13 mb/d. Canadian oil output
in 2Q15 unexpectedly saw a huge decline by 0.47 mb/d compared to 1Q15, which was
not only due to the seasonal pattern, but also as a result of a wildfire in Alberta.
It is worth mentioning that 8 projects out of 13 have started up in Canada so far in
The implemented projects are:
1. Thick wood – Sunshine A1 April 2015
2. Cold Lake Nabiye April 2015
3. Foster Creek F January 2015
4. Foster Creek G April 2015
5. Rush Lake May 2015
6. South White Rose extension project (offshore) Late June 2015
7. Kearl Mining project with peak capacity 220 tb/d Mid-June 2015
8. Surmont 2, in situ/SAGD project, capacity 118 tb/d September 2015
The other five major oil sands projects have been delayed or put on hold until prices
recover. But enough projects are continuing to realize growth in 2016, albeit at a very
modest level. In mid?June, Imperial Oil announced the start?up of the 110 tb/d
expansion at its Kearl mining project, ahead of the original schedule that was slated for
year?end. If capacity is reached, the Kearl project is expected to produce 220 tb/d. In
September, ConocoPhillips delivered first oil at its Surmont 2 in situ facility, the largest
SAGD project undertaken to date. Production is expected to ramp up through 2017,
adding approximately 118 tb/d to gross capacity.
Canada’s overall rig count at the end of September decreased by 24 units to reach a
total of 182. The number of active rigs in Alberta, the main state for oil sands
production, also decreased by nine rigs to 120 units. Nevertheless, Alberta’s rigs were
down by around 53% y-o-y, and Canada’s overall rig count fell by 205 rigs.
On a quarterly basis, Canada’s oil supply in 2015 is expected to average 4.60 mb/d,
4.13 mb/d, 4.29 mb/d and 4.42 mb/d, respectively.
Mexico’s liquids production in 2015 is expected to decline significantly by 0.21 mb/d to
average 2.60 mb/d. Liquids output in 3Q15 increased by 10 tb/d to average 2.60 mb/d,
but preliminary data shows that crude output increased by 40 tb/d to average
2.26 mb/d in the same quarter, although output in August and September declined slightly compared to July. Mexico’s oil supply in 3Q15 declined by more than 6%
(170 tb/d) over the same quarter a year earlier. Mexico also produced 0.33 mb/d of
NGLs in 3Q15.
Output from the Ku-Maloob-Zaap cluster (KMZ) fell below 0.77 mb/d, the lowest level
since November 2008 and likely due to unplanned maintenance works. Y-o-y the figure
was down by 85 tb/d, the steepest decline in over 10 years. Cantarell’s decline was
back to 0.1 mb/d in August, while the y-o-y fall at Ligero Marino doubled m-o-m to
43 tb/d. Moreover, Pemex conducted works at the 49 tb/d light crude producing
Samaria field in the second half of August, which offset the recovery in Chuc (where
output returned to y-o-y growth for the first time in six months) and Ixtal’s output after
the fire at the Abkatun oil platform in April. September has seen crude output remain
broadly flat m-o-m, with the y-o-y decline easing to 0.12 mb/d, although KMZ’s
production has recovered back to 0.84 mb/d.
Mexican state oil company Pemex has received final approval from the country's
energy ministry for its plans to seek farm-out partners for several oil fields. In late
September, the CNH, Mexico's upstream regulator, assessed Pemex's requests to
farm out stakes in 12 oil fields, which would be divided into seven contracts, and
determined that the plans were in the national interest. The farm-outs would be
Pemex's first since a 2013 constitutional reform ended its 76-year oil and gas
monopoly. Pemex had originally planned to farm-out stakes in 10 upstream projects by
the end of 2015, as part of the country's first post-reform bid round, which was
launched last year.
The first auction, for 14 shallow-water exploration blocks, took place in July 2015 and
saw just two blocks awarded. The most recent one, for five other shallow water blocks
with certified reserves, was held in late September and saw three blocks taken up. The
farm-out auction is now generally expected sometime next year.