Canadian oil sands hold a low-breakeven resource advantage, new EIR report says
Enverus Intelligence® Research (EIR) has released its annual Oil Sands Play Fundamentals report that examines recent development trends, remaining resource and associated economics across both surface mining and steam assisted gravity drainage (SAGD) projects.
“The oil sands resource in Western Canada is vast and anticipated to continue to grow approximately 400 MMbbl/d by the end of the decade,” said Dane Gregoris, managing director at EIR.
“Almost all of this growth will be driven by brownfield expansions of existing SAGD projects. We expect WCSB oil production will fill existing pipeline capacity by 2027. Enbridge’s Mainline expansion and TMX’s additional expansion should relieve egress pressure thereafter.”
“Existing projects deliver the lowest-breakeven oil in the region. Total company-disclosed proved oil reserves amount to about 30 billion barrels which breaks-even at prices lower than $50 WTI. That’s over 20 years of current production.”
“To access most of the remaining 100 plus billion barrels of undeveloped oil sands resource, new greenfield mining and SAGD projects are required. According to our calculations, top-tier greenfield SAGD projects require stable oil prices of $80 plus WTI to generate enough profits to be greenlit in today’s market environment,” said Gregoris.
Key takeaways:
Canada is anticipated to grow oil production by ~600 Mbbl/d by 2030 with oil sands expansion projects making up two-third of this volume.
U.S. trade tensions and oil price declines, if sustained, may slow down oil sands growth but only at the margin, given these are long lead time projects and significant capital is already sunk.
