Page 5 - NorthAmOil Week 02 2022

NorthAmOil COMMENTARY NorthAmOil

Oil sands producers
are benefiting from
additional pipeline
capacity that allows
more of their crude to
reach the Gulf Coast.

Joining the club oil sands crude to reach the US Gulf Coast.
CNRL has significant conventional operations, As a result of these developments, exports of
and these are anticipated to drive 2022 pro- oil sands crude to Asia have reached record highs
duction growth of roughly 60,000 barrels of according to oil analytics firm Kpler. Data from
oil equivalent per day (boepd) while oil sands the company show that India is the leading des-
output is affected by planned turnarounds. tination for exports of Canadian crude, followed
Nonetheless, its capex budget increase – and the by China and South Korea.
growth capital that will be allocated to the oil Canadian crude exports from the Gulf Coast
sands – bodes well for the region. averaged 25,000 bpd in 2018, rising to aver-
Indeed, CNRL is the last of Canada’s four oil age around 70,000 bpd in both 2019 and 2020.
sands giants to unveil its capex budget for 2022, According to Kpler, shipments of heavy crude
and its planned spending increase is among the jumped to more than 266,000 bpd in December
larger ones in percentage terms. Only Imperial, after averaging over 180,000 over the course of
which unveiled a 2022 capex budget that would 2021, illustrating the rise in Canadian crude vol-
mark a 24% rise on 2021 in December, is plan- umes reaching the Gulf Coast.
ning to step up spending more dramatically. News service Bloomberg described this as a
According to the announcements made last “sea change” for Canada’s oil industry.
month, Suncor’s 2022 capex budget marks an “Looking ahead, Canadian crude exports
increase of 12.4% on the mid-point of its 2021 out of the US Gulf should continue to show
guidance, while for Cenovus the rise is 11.3%. strength,” a Kpler oil analyst, Matt Smith, was
However, Imperial is also set to spend the quoted by Bloomberg as saying. “With Venezue-
smallest amount of the four companies over- lan crude exports having tanked in recent years,
all, with a budget of CAD1.4bn ($1.1bn) for and now with the prospect of Mexican crude
2022. Meanwhile Suncor and Cenovus have being taken off the market, Canadian crude Oil sands
set out plans to spend CAD4.7bn ($3.8bn) and appears to be one of the leading beneficiaries of
CAD2.8bn ($2.2bn) respectively. these changing dynamics.” producers,
Nonetheless, each company is stepping up Canadian oil sands crude exports stand to despite stepping
spending by hundreds of millions of dollars, and be boosted further when the Trans Mountain
this illustrates how much more favourable the expansion to the British Columbia coast enters up spending, are
operating environment looks now compared service, currently targeted for December 2022.
with recent years. The link will provide a direct route for oil sands still holding back
crude to be exported from Canada without being
Pipeline boost transported through the US. from investing in
The oil sands giants are also benefiting from new Oil sands producers, despite stepping up any new projects.
takeaway options. At the end of 2021, Enbridge’s spending, are still holding back from investing
Line 3 replacement pipeline came into service in any new projects, opting instead to expand
after extensive delays, adding roughly 390,000 existing assets. This can be attributed in part to
bpd of capacity from Alberta to Wisconsin. worries over further oil price volatility, but also
Oil sands producers received a further boost to concerns over how Canada’s environmental
with the recent reversal of Marathon Pipe Line’s targets can be balanced with further oil sands
Capline, which started interim service from development. However, if global oil demand and
Illinois to Louisiana in December, reaching full prices keep rising, the appetite for output from
service of an initial 102,000 bpd on January 1. the oil sands will return, even if environmental
Together with the Line 3 replacement, this pipe- opposition to further development of the region
line has allowed additional volumes of Canadian will remain as strong as ever.™

Week 02 13•January•2022 www. NEWSBASE .com P5