NorthAmOil: Growth amid uncertainty for the oil sands

Production in Alberta – home to the oil sands – reached an all-time record of 3.53mn barrels per day (bpd) on average in the first half of 2021. This marked a 5.7% increase on the same period of 2020, and a 1.8% increase on the first half of 2019.
Some producers are hoping to raise their output further still. Oil sands giant Canadian Natural Resources Ltd (CNRL) said it was increasing its capex owing to an increasingly positive outlook for commodity prices. The company expects its total production for 2021 to come in above the mid-point of its previous guidance, reaching 1.22-1.27mn barrels of oil equivalent per day (boepd), while its gas output exceeds the top end of its previous guidance range.
The oil sands are set to receive a further boost as Enbridge’s Line 3 replacement pipeline approaches start-up later this year, significantly raising takeaway capacity from the region for the first time in years. But even as all these factors position the oil sands for growth in the near term, long-term questions are arising over their future against the backdrop of the energy transition.
And other oil sands producers are proceeding with caution, following the hits their businesses took owing to a cycle of industry downturns, as well as the coronavirus (COVID-19) pandemic and growing environmental opposition to their operations.
Indeed, Cenovus Energy has said it will prioritise eliminating debt and paying back shareholders, with any growth coming from small expansions at existing assets. Meanwhile, Suncor Energy has said it will be prioritising value over volume until 2025. And even CNRL’s planned increase in spending is comparatively modest. However, these producers may be trying to make the most of oil sands opportunities while they still exist, given the amount of uncertainty about the future.