Western Canadian oil production is projected to increase by approximately one million barrels per day over the next seven years, primarily due to expansions in existing steam-driven oilsands projects, according to a recent report by Enverus Intelligence Research. However, the planning and construction of such projects can be time-consuming, limiting producers’ ability to capitalize on the rise in global crude oil prices resulting from the conflict in the Middle East.
The price of West Texas Intermediate crude for June delivery was hovering around $90 US per barrel, down from its peak of $114 US during the conflict but still 33% higher than pre-war levels in late February. Enverus notes that the oilsands possess drilling opportunities that break even below a $50-per-barrel US WTI price for the next 50 years.
Dane Gregoris, managing director at the research firm, emphasized that the Canadian oilsands represent a significant long-term resource in North America with substantial drilling potential and competitive economics. However, he cautioned that with the expected growth rates, existing pipeline capacity to transport Western Canadian crude to markets will likely reach full capacity by the early 2030s, even with recent pipeline expansions.
To address this issue, the Alberta government is preparing an application to the major projects office for a new bitumen pipeline to the West Coast, aiming to facilitate increased volumes of oilsands crude reaching Asian markets. The major projects office, established to accelerate infrastructure projects of national importance, is being leveraged due to private sector reluctance to undertake such ventures amid regulatory uncertainties and environmental challenges.
An energy agreement signed between Ottawa and Alberta late last year outlines a pathway for a new B.C. pipeline to be designated a national-interest project. However, unresolved conditions, such as the Pathways carbon and storage project agreement, are critical for the pipeline’s advancement. Additionally, Enbridge Inc. and South Bow Corp. are progressing with expansions to current networks to enhance crude flow southward, while Trans Mountain Corp., a federal entity, aims to increase shipments of oilsands crude to the Vancouver region primarily for Asian exports.