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Project delays sink oil sands output in 2019

Published by , Editorial Assistant
Hydrocarbon Engineering,

Canadian Oil Sands production in 2019 will be almost 230 000 bpd lower than last year, according to ESAI Energy’s recently published North America Watch. Planned Canadian Oil Sands projects are being pushed back in response to further delays in pipeline egress and the mandated output cuts by the Alberta provincial government. This uncertain business environment poses risks for future production growth from Western Canada, as final investment decisions for planned projects may also be deferred in 2019.

What started as a mandated production curtailment by the government of Alberta to reduce the glut in inventories and ameliorate the steep discount for heavy crude has unintentionally undermined confidence in new investment. Combined with the recent announcement of a delay in permitting for Enbridge’s 370 000 bpd Line 3 Replacement project, and further delays for the 830 000 bpd Keystone XL pipeline, Oil Sands producers are pulling back on capitalising completion of new projects that would have added a combined 80 000 bpd in new productive capacity in 2019.

The report also describes how the lower levels of production will reduce Canadian crude-by-rail volumes from the recent record highs of over 330 000 bpd. Elisabeth Murphy, analyst at ESAI explains that “By July, the call on rail will start to pick up again as operators come out of spring maintenance, but a subdued production rebound will likely keep rail volumes under 220 000 bpd for the remainder of 2019”.

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Downstream news North America downstream news