Page 17 - NorthAmOil Week 01 2021

NorthAmOil PERFORMANCE NorthAmOil

Oil sands production

sets record

ALBERTA PRODUCTION from Alberta’s oil sands hit
a record high in November 2020 according to
provincial data. The Alberta Energy Regulator’s
(AER) figures, released this week, showed that
in November oil sands production hit a record
3.16mn barrels per day (bpd).
This came as producers ramped up output in
anticipation of the Alberta government lifting
mandatory curbs on the province’s oil. And the
record was set despite Alberta’s production being
hit hard earlier in 2020 as the oil price collapse
prompted oil sands operators to bring in addi-
tional voluntary curtailments.
The resulting production drop-off meant that
the Alberta government decided it no longer
needed to maintain mandatory curbs, which
had been in place since the start of 2019. But the
curbs were only lifted in December, and various
other factors also helped boost production prior
to their removal.
Among these was the fact that oil prices had
remained relatively stable in the second half of
the year following a particularly volatile few
months in the spring. Production may have also
been boosted by progress on major new pipeline
projects that are being built to connect the oil
sands with various markets.
Notably, Enbridge secured the final permits
it required to build the portion of its Line 3
replacement project that passes through Minne-
sota. Construction on that section is now under- “There will be a bit of incremental growth in
way – and has already been completed on other excess of this record,” Murphy said. “Our model
portions of the pipeline. The Minnesota section shows the oil sands getting to 3.3mn bpd by the
is expected to be completed in the second half middle of 2021.”
of 2021. The Canada Energy Regulator (CER), for its
The Line 3 replacement – along with the part, has projected that oil sands production will
Operators Trans Mountain expansion, which is also under peak at around 4.3mn bpd in 2039, and expects
were able construction – will add significant new takeaway most of that growth to come from expansions at
subsequently capacity to the oil sands. This is expected to help existing facilities.
push up regional crude prices and potentially
As well as dynamics involving regional oil
to ramp up spur the expansion of existing oil sands projects, prices, takeaway capacity and provincial pro-
though new oil sands ventures look increasingly duction restrictions, any future growth of the oil
output while still unlikely to proceed. sands will depend on the extent to which Canada
But while much has been made by the oil and Alberta embrace the energy transition.
staying within the sands industry of their need for more takeaway Canadian Prime Minister Justin Trudeau has

limits imposed capacity in the longer term, in the short term long struggled to balance energy development
pipeline bottlenecks evaporated as producers with decarbonisation, but in December, his gov-
by the Alberta shut in some of their output in response to the ernment announced that it would hike the coun-
market.
try’s carbon tax. This comes as Trudeau attempts
Indeed, operators were able subsequently to to implement practical steps for Canada to reach
government. ramp up output while still staying within the lim- net zero greenhouse gas (GHG) emissions by
its imposed by the Alberta government. A Tudor, 2050.
Pickering, Holt & Co. analyst, Matt Murphy, told Any such practical steps represent compli-
Reuters that producers were able to achieve this cations for oil sands producers, who are already
by cutting back on their conventional crude weighed down by the combination of low oil
output. And now that the provincial curbs have prices and the difficulties they are facing in
been lifted, production could climb further still, improving negative public perceptions of their
assuming oil prices support this. environmental credentials.™

Week 01 07•January•2021 www. NEWSBASE .com P17