S&P Global: Canadian oil sands production expected to reach all-time highs this year
S&P Global Commodity Insights expects a record annual average output of 3.5 million b/d from Canadian oil sands in 2025, marking a 5% increase from 2024, as part of its updated 10-year production forecast.
The projection anticipates production will rise to over 3.9 million b/d by 2030, which is half a million b/d higher than 2024. Notably, the 2030 forecast has been revised upwards by 100,000 b/d, or nearly 3%, compared with the previous outlook.
This latest projection, produced by the S&P Global Commodity Insights Oil Sands Dialogue, is the fourth consecutive upward revision to the annual outlook. Despite a lower oil price environment, the analysis cites favorable economics as the key driver behind the upward revision, as producers continue to focus on maximizing existing assets through investments in optimization and efficiency.
While launching new oil sands projects typically requires substantial initial investments spread over several years, once these projects are operational, they have relatively low breakeven costs, S&P said.
S&P Global Commodity Insights estimates that the 2025 half-cycle break-even for oil sands production was $18-45/bbl, on a WTI basis, with the overall average break-even being about $27/bbl.
“The increased trajectory for Canadian oil sands production growth amidst a period of oil price volatility reflects producers’ continued emphasis on optimization—and the favorable economics that underpin such operations,” said Kevin Birn, chief Canadian oil analyst, S&P Global Commodity Insights. “More than 3.8 million b/d of existing installed capacity was brought online from 2001 and 2017. This large resource base provides ample room for producers to find debottlenecking opportunities, decrease downtime and increase throughput.”
The potential for additional upside exists given the nature of optimization projects, which often result from learning by doing or emerge organically, according to the analysis.
“Many companies are likely to proceed with optimizations even in more challenging price environments because they often contribute to efficiency gains,” said Celina Hwang, director, crude oil markets, S&P Global Commodity Insights. “This dynamic adds to the resiliency of oil sands production and its ability to grow through periods of price volatility.”
The outlook continues to expect oil sands production to enter a plateau later this decade. However, this is also expected to occur at a higher level of production than previously estimated. The new forecast expects oil sands production to be 3.7 million b/d in 2035—100,000 b/d higher than the previous outlook.
Export capacity—already a concern in recent years—is a source of downside risk now that even more production growth is expected. Without further incremental pipeline capacity, export constraints have the potential to re-emerge as early as next year, the analysis showed.
“While a lower price path in 2025 and the potential for pipeline export constraints are downside risks to this outlook, the oil sands have proven able to withstand extreme price volatility in the past,” said Hwang. “The low break-even costs for existing projects and producers’ ability to manage challenging situations in the past support the resilience of this outlook.”
