Canada’s oil industry is gearing up for an impressive 10% increase in production over the next year. It is making it one of the world’s largest sources of boosted oil supply. Presently, Canada produces approximately 4.8 million barrels per day (bpd) of crude oil. This figure is anticipated to climb to around 5.3 million bpd by the end of 2024. It is marking an all-time high in Canadian production.
This substantial growth is attributed to several factors, with Alberta’s oilsands playing a significant role, and additional increases expected in Western Canada and offshore facilities near Newfoundland and Labrador.
Kevin Birn, S&P’s chief analyst for Canadian oil markets, emphasized the significance of this growth, stating, “Half a million is a lot. It’s bigger than a lot of countries produce in the world.” This remarkable surge in oil output is partly a result of lower production in the preceding year due to extensive maintenance requirements at certain oilsands facilities.
Canada’s record-breaking oil production coincides with the final stages of construction for the expanded Trans Mountain pipeline. This expansion will boost the pipeline’s capacity from 300,000 bpd to 890,000 bpd, facilitating the transportation of more oil from Alberta to the West Coast.
While this growth is remarkable, experts caution that it may be temporary, as there is an expectation of a plateauing effect in Western Canada’s supply growth around 2025-2026. Despite this prediction, the restart of the Terra Nova field off the coast of Newfoundland and Labrador is expected next year, albeit after facing several delays.
Largest source of global crude oil production
In 2024, Canada is poised to become the largest source of global crude oil production growth. It is surpassing the projected 400,000 bpd growth in the United States. Additionally, Latin America, specifically Guyana and Brazil, is expected to contribute about 400,000 bpd to global production growth next year.
Deloitte Canada’s recent report suggests that Canada’s anticipated growth over the next two years will surpass the total increase witnessed in the past five years.
However, the Canadian government is also focusing on environmental concerns. They plan to introduce draft regulations to cap emissions from oil and gas production this fall. With the goal of gradually reducing emissions over time. The oilsands currently account for about 11% of Canada’s total greenhouse gas emissions. It is the remainder of the oil industry and the entire natural gas industry responsible for an additional 15%. Surprisingly, despite production growth, total oilsands emissions remained stable in 2022, as reported by S&P Global Commodity Insights in August.
In summary, Canada’s oil industry is on the cusp of significant growth. It is a prominent player in global crude oil production. However, this surge may be short-lived, as the industry anticipates a plateau in supply growth in the coming years. The Canadian government is also taking steps to address environmental concerns through emissions regulations.