ESAI: Disappearing megaprojects to slow oil sands growth

Oct. 25, 2017
ESAI Energy LLC forecasts leaner and smaller Canadian oil sands projects in the coming years as producers face high costs in a recovering oil-price environment.

ESAI Energy LLC forecasts leaner and smaller Canadian oil sands projects in the coming years as producers face high costs in a recovering oil-price environment.

The Boston consultancy forecasts oil sands production growth will decelerate to 120,000 b/d in 2019 from 250,000 b/d in 2018, noting that producers are being selective in their allocation of capital to growth projects.

Suncor Energy Inc.’s operated 190,000-b/d Fort Hills mine, due for startup by yearend, might be the last greenfield mining project in the oil sands for several years, ESAI Energy says. That project was sanctioned in 2013.

While operators are experimenting with solvents and new processes that have the potential to reduce both costs and emissions, new greenfield projects are unlikely to go forward until after 2020.

ESAI Energy expects incremental growth will continue from expansions to existing steam-assisted gravity drainage projects that require less initial capital outlays and that can come online in less time.

Pipeline capacity to accommodate production growth also is proving to be elusive as lengthy regulatory reviews and court challenges delay projects. Current takeaway capacity for surplus Canadian crude remains constrained until Enbridge Inc.’s Alberta Clipper Line 67 expansion comes online in late 2018 and provides some temporary relief (OGJ Online, Oct. 17, 2017).

“Even with decelerating growth in 2019, additional capacity beyond the Line 67 expansion will be needed to accommodate production growth after 2019,” said Elisabeth Murphy, ESAI Energy analyst.