Canada looks to remain a major supplier of oil as the projected growth from the country's oil sands is expected to increase by 42 percent by 2025. By then, the oil sands should be producing approximately 3.4 million barrels of crude per day.
At the present time, oil sands account for around 2.75 million barrels per day. Analysts at HIS Energy commented that the growth will probably come from the expansion of existing projects, as opposed to new endeavors. IHS Energy Director Kevin Burns stated: "We expect oil sands producers to focus future investments in the coming years onto their most economic projects - which we expect to be expansions of existing facilities. Expansions of existing facilities are better understood, quicker to first oil and lower cost to construct."
The growth would come from what are known as "brownfield expansions," which refers to the practice of adding on to existing operations. Those are operations in the Canadian oil sands areas in which lower construction activity has resulted in lower costs, improved efficiency and cheaper product.
IHS estimates that in the last two years, the cost to build and operate new oil sands plants has dropped by about $10 per barrel, and that an existing thermal oil sands operation could break even at about US$50 per barrel. Due to the drop in crude prices, companies such as Cenovus and Royal Dutch Shell have stopped creating new oil sands plants.
Canada is in what is known as the G-5+2 group, which is shorthand for the Gulf 5 plus the United States and Canada. IHS notes this group, made up of low-cost Middle East countries and the two North American Nations, will account for the growth of the world's crude supply over the next ten years.
On Monday, U.S. crude was at $46.09 per barrel after breaching the $50 mark earlier in the year.
By Lincoln Brown for Oilprice.com
More Top Reads From Oilprice.com:
Lincoln Brown is the former News and Program Director for KVEL radio in Vernal, Utah. He hosted “The Lincoln Brown Show” and was penned a… More
Comments