According to a recent report from the Canadian Association of Petroleum Producers (CAPP), Canadian oil production is expected to increase rapidly over the next 15 years, led by growth from the oil sands.
TUTORIAL: The Industry Handbook: The Oil Services Industry
In 2010, Canada reported oil production of 2.8 million barrels per day. The CAAP report calls for total oil production from Canada to hit 3.5 million barrels per day in 2015, 4.2 million barrels per day in 2020 and 4.7 million barrels per day in 2025. The estimate for 2025 is 401,000 barrels higher than the forecast published in 2010 and incorporates the most optimistic growth scenario for Canadian oil production.
CAPP estimates that production from various oil sands projects in Canada will reach 2.2 million barrels per day in 2015, 3 million barrels per day in 2020 and 3.7 million barrels per day by 2025. Actual oil sands production in 2010 was about 1.5 million barrels per day. (For related readings, see Oil: A Big Investment With Big Tax Breaks.)
Canadian oil sands reserves are located in Alberta in the Athabasca, Cold Lake and Peace River deposits. The Alberta Energy Resources and Conservation Board estimated that these three areas contained 170 billion barrels of reserves at the end of 2009. There are also oil sands deposits in Saskatchewan that have the potential for commercial development, but no estimates have been made on these areas yet.
One of the largest oil sands operations is the Athabasca Oil Sands Project (AOSP), which is operated and 60% owned by Royal Dutch Shell (NYSE:RDS). The project has a current capacity of 155,000 barrels per day, and a 100,000 barrel-per-day expansion under construction. Marathon Oil (NYSE:MRO) and Chevron (NYSE:CVX) each own a 20% interest in AOSP. (Before jumping into this hot sector, learn how these companies make their money. For more, see Oil And Gas Industry Primer.)
Nexen (NYSE:NXY) operates and owns 65% of the Long Lake oil sands project. The company reported average gross production of 28,300 barrels per day from Long Lake in May 2011. Nexen is looking to ramp up gross production to 60,000 barrels per day during phase one of this project.
One of the oldest operations in the oil sands is the Syncrude Project, which first started up production in 1978. Syncrude is expected to produce approximately 301,000 barrels per day in 2011. Total production capacity at Syncrude is 350,000 barrels per day.
The ownership of the Syncrude project is shared by a number of public oil and gas companies including Suncor (NYSE:SU), Murphy Oil (NYSE:MUR), Nexen, Imperial Oil (NYSE:IMO), Canadian Oil Sands Ltd. (TSX:COS) and China Petroleum & Chemical Corporation (NYSE:SNP) among others.
Cenovus Energy (NYSE:CVE) is involved in different projects in the oil sands and just updated the company's 10-year strategic plan. The company estimates that it will add oil sands production of 400,000 barrels of oil per day by 2021. Most of this production will come from projects at Foster Creek and Christina Lake.
The Bottom Line
Oil production from Canada will increase quickly through 2025, led by growth from various oil sands areas, as many operators are planning new projects or upgrades of existing facilities. (For related reading, see Understanding Oil Industry Terminology.)
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