Canada’s oil production is expected to increase by about 10 percent over the next year and become one of the largest sources of increased supply worldwide.
The country produces about 4.8 million barrels per day (bpd) of crude oil and that figure could rise by about 500,000 bpd to about 5.3 million bpd by the end of 2024, according to S&P Global Commodity Insights. This would mark an all-time high for Canadian production.
Alberta’s oil sands are expected to drive much of the growth, although increases are expected across Western Canada and in offshore facilities near Newfoundland and Labrador.
“Half a million is a lot,” said Kevin Birn, S&P’s chief analyst for Canadian oil markets. “It’s bigger than what many countries in the world produce.”
The sharp increase in oil production expected over the next 12 to 14 months is partly a result of lower overall production this year, due to prolonged maintenance requirements at some oil sands facilities.
The country’s oil production is expected to hit an all-time high just as the expanded Trans Mountain pipeline begins pumping more oil from Alberta to the West Coast. Its expansion, which is in the final stages of construction, will increase the pipeline’s capacity from 300,000 bpd to 890,000 bpd.
Large tar sands companies are not increasing their spending to extract more oil from the ground, Birn said, but rather looking for ways to make their existing facilities more efficient at full capacity.
Still, he warns that this level of production growth will be short-lived and could stabilize after 2024.
“This could be the last big development before we see a major slowdown in supply growth in Western Canada,” Birn said. “We see this stabilization effect really starting around 2025 and 2026.”
Reactivation of the Terra Nova field off the coast of Newfoundland and Labrador could occur next year, although it has faced several delays.
By 2024, Canada could be the biggest source of global crude oil production growth. The country’s expected increase in oil production of around 500,000 bpd is larger than the 400,000 bpd growth projected in the US.
Elsewhere, production increases in Guyana and Brazil could result in growth of around 400,000 bpd in Latin America next year.
Canada’s projected growth over the next two years is expected to exceed the total amount added over the past five years, according to a recent report from Deloitte Canada.
This fall, the federal government intends to post drafting regulations to limit emissions from oil and gas production and then forcing them to reduce them over time.
The tar sands account for about 11 per cent of Canada’s total greenhouse gas emissions, while the rest of the oil industry and the entire natural gas industry account for 15 per cent.
Overall, total oil sands emissions remained stable in 2022, even as production grew slightly, according to an August report. analysis published by S&P Global Commodity Insights.