Oilsands get a taste of their slower-growth future as logjams crush output
Canada’s oilsands are experiencing a preview of the slower growth that’s to come.
Husky Energy Inc. on Thursday became the second big oilsands producer to say that it throttled back first-quarter production in response to steeper discounts for Canadian crude. Those wider differentials stem from Alberta’s dearth of pipelines and railroads to haul crude to refiners. Rival oilsands company Cenovus Energy Inc. halted all investments in new projects until the pipeline mess is resolved.
While Cenovus and Husky both billed their output slowdowns as temporary, the first-quarter hiccups foreshadow an era of shrinking gains in oilsands production.
Output of bitumen and upgraded crude may grow 11 per cent to 2.98 million barrels a day this year, according to the Canadian Association of Petroleum Producers, boosted by megaprojects like Suncor Energy Inc.’s Fort Hills mine and an expansion at Canadian Natural Resources Ltd.’s Horizon mine.
But those supply gains will taper off to 2.5 per cent next year and average less than 2 per cent annually through 2030 as pipeline and regulatory hurdles curtail investments in the world’s third-largest oil reserves, CAPP said.
“The slower growth is reflective of continuing uncertainty as companies assess the impact of impending risks to their operating environment,” the trade group said in a report last year. “The economic competitiveness of the oilsands on a global scale is vital in order to attract capital to build for the future.”