Oilsands production in Canada is expected to grow despite the cancellation of the 830,000 b/d Keystone XL pipeline project because other export pipelines continue to advance toward completion, according to IHS Markit.
IHS Markit on Wednesday pointed to 960,000 b/d of capacity under construction in Canada and the United States. These include the 590,000 b/d Trans Mountain Pipeline expansion and the 370,000 b/d Line 3 expansion by Enbridge Inc.
“If Enbridge Line 3 and Trans Mountain pipeline, as well as other announced optimizations, are able to proceed as planned, pipeline export capacity may be adequate,” said the consultancy.
“However, in the absence of Keystone XL pipeline, there is the potential for high levels of export pipeline utilization, which would leave little room to absorb any system upsets and could contribute to regional price volatility.”
The firm cut its previous oilsands prediction of 3.8 million b/d by 2030, but only marginally. The 10-year forecast still calls for 3.6 million b/d, up 22% from the fully restored, post-Covid-19 pace of 2.95 million b/d.
Researchers echoed Canadian industry consensus that the next round of Alberta oilsands expansion would be dominated by additions to established production sites instead of new projects. More than 80% of the growth is expected to come from the ramp-up, optimization and completion of projects where some capital has already been invested.
“Nearly two-thirds alone is expected to come from just the ramp-up of existing operations,” according to IHS.
IHS Vice President Kevin Birn added that corporate finance trends contribute to the reduced production growth outlook.
“Although oil prices have rebounded and even exceeded pre-pandemic levels, producers are prioritizing rebuilding their balance sheets, paying down debt and returning cash to shareholders,” Birn said.
Imperial Oil Ltd., a pillar of bitumen mining and underground extraction, on Wednesday highlighted the industry’s concentration on corporate financial health and shareholder returns. The Calgary producer said it would buy back up to 35.6 million shares, or 5%, of its 711.7 million outstanding stock.
The buyback includes by ExxonMobil, which is to sell enough shares to maintain its majority ownership at a long-standing level of 70%. The offer, which begins later this month, would extends a share buyback that has to date paid C$982 million ($785 million) to Imperial stockholders including ExxonMobil.
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