Page 4 - NorthAmOil Week 34 2021

NorthAmOil COMMENTARY NorthAmOil

Growth amid uncertainty

for the oil sands

Oil sands production has reached an all-time record high and is

set to grow further still, but the picture is far more uncertain in

the longer term

ALBERTA PRODUCTION in Alberta – home to the oil over the long term. Indeed, some producers are
sands – is on the up again after taking a hit fol- hoping to raise their output further still during
WHAT: lowing the onset of the coronavirus (COVID-19) the second half of this year, even as others focus
Alberta’s oil sands pandemic. Indeed, the province’s output reached on remaining disciplined regardless of market
production has reached an all-time record high of 3.53mn barrels per day conditions.
new highs. (bpd) on average in the first half of 2021. This Oil sands giant Canadian Natural Resources
marked a 5.7% increase on the same period of Ltd (CNRL) said it was stepping up its capex
WHY: 2020, and a 1.8% increase on the first half of owing to an increasingly positive outlook for
Stronger oil prices and 2019. commodity prices. The company expects its
demand have helped In the short term, the outlook for the region total production for 2021 to come in above the
producers to bounce remains relatively bright, despite further poten- mid-point of its previous guidance, reaching
back from the first wave tial volatility related to the pandemic. Oil prices 1.22-1.27mn barrels of oil equivalent per day
of the pandemic. have dropped back somewhat from their peak a (boepd), while its gas output exceeds the top
month ago, but not the levels seen throughout end of its previous guidance range.
WHAT NEXT: 2020, as well as in early 2021. On top of this, the CNRL said in its second-quarter earnings
While output will be region is set to receive an imminent boost from release that it was raising its capital budget for
boosted further by new the start-up of the Line 3 replacement pipeline. 2021 by CAD275mn ($217mn) to roughly
takeaway capacity in the In the longer term, though, the oil sands’ CAD3.48bn ($2.74bn).
short term, the oil sands’ future remains highly uncertain as producers This comes as other leading oil sands pro-
future is highly uncertain. come under greater pressure to decarbonise, as ducers are proceeding with caution, following
does Canada as a whole. the hits their businesses took owing to a cycle
of industry downturns, as well as the pandemic
Production push and growing environmental opposition to their
It is possible that oil sands players are trying to operations.
make the most of conditions being relatively Indeed, Cenovus Energy has said it would
favourable, as they know it will likely not last prioritise eliminating debt and paying back

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