The coming startup of the Trans Mountain pipeline will help boost Canadian oil production to an all-time high within the next two years, according to a new report.
The report by Deloitte Canada said the extra capacity created by the currently ongoing pipeline expansion is expected to boost Canadian production by about 375,000 barrels a day over the next two years.
That represents an eight per cent increase from the previous production high set in November 2022, and a nearly nine per cent increase from the 4.18 million barrels per day (bpd) of oil that Canada produced in June of this year — the most recent month for which statistics are available through the Canadian Centre for Energy Information.
"The increase in volume is notable: it’s greater than the total amount added to Canada’s production levels over the past five years combined," the report said.
The Trans Mountain pipeline is Canada's only pipeline system transporting oil from Alberta to the West Coast.
Its expansion, which is currently underway, will boost the pipeline's capacity to 890,000 bpd from 300,000 bpd.
Much of these additional exports will go to markets outside the United States, allowing Canadian producers to reduce their dependence on U.S. refinery operations.
This, in turn, is expected to narrow the price discount Canadian bitumen producers typically receive for their product compared with higher-quality U.S. sweet crude.
According to the Deloitte report, the vast majority of the expected increase in Canadian oil production in the coming years will come from the oilsands, where companies are working on thermal expansion projects that will link new assets with existing facilities to speed up development at a lower cost.
Deloitte added that in spite of rising oil production in both Canada and the U.S., global crude prices will likely remain at elevated levels in 2024.
“The extra supply of North American crude will likely continue to be offset by voluntary supply cuts from some OPEC+ member countries, moderating any downward pressure on prices,” said Andrew Botterill, Deloitte Canada's national oil, gas and chemicals leader, in a release.
The Trans Mountain pipeline expansion is expected to be completed in early 2024.
The pipeline was purchased by the federal government in 2018 after its previous owner Kinder Morgan Canada Inc. threatened to scrap the expansion project in the face of environmentalist opposition and regulatory hurdles.
Proponents of the Trans Mountain pipeline expansion say improved market access for Canadian crude will help Canada's energy industry meet growing global demand for oil during a time when Russia's war in Ukraine has placed pressure on world energy markets.
Opponents say Canada cannot increase its oil output and still achieve the international commitments it has made on climate change and emissions reduction.
This report by The Canadian Press was first published Oct. 4, 2023.
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This report is bare bones
This report is bare bones factual and neutral and offers just basic insight into the proponent's and opponent's points of view. It also falls short. I have no doubt the report's conclusions and methodology will be reviewed by some smart critics with exemplary analytical abilities. Robyn Alan and David Hughes come to mind.
We've been reading about the access to Asian refineries that will diversify the export market for diluted bitumen away from the USA for years. Yet to my knowledge no Asian buyers have popped up with their bankers waiting in anticipation to increase their supply of heavy, poor quality oil that requires extra steps in the refining process just to get the sludge to the usable synthetic crude stage . According to economist Alan, CAPP used made up data in its 2015 report to justify their support of TMX, citing the vaunted Asian market as though it was a magical kingdom.
Alan was right, it turned out. The only time diluted bitumen from the oilsands was actively sourced by Asian refiners was when the product was at record LOW prices, low enough to make the expensive transoceanic trip worth it. What Asian buyer is willing to pay a premium for a low quality oil that costs even more to ship long distances and uses up twice the refinery resources?
So far, the Asian market narrative seems to be just a fantasy spin doctor exercise written by American buyers who want to see TMX completed, because they will accept the ships down the coast at heavy oil refineries in Washington and California that -- shhhh! -- will pay the same old "discount" they always have (read: fair price based on quality measures).
The main reason this is so is likely because the US refinery owners are the same companies who have subsidiaries or contractual partners with stakes in mining the stuff in Alberta. They have captured the entire production chain as well as the utterly mind blowing value of selling finished products like gasoline and diesel at a huge price differential with what they paid at the ground source. The only exception to USA hegemony in Alberta oil would probably be with the Chinese interests in the oilsands and their refinery friends back home, otherwise it's the same old pattern of Canada/Alberta creating jobs in a foreign land at our public's expense and without regard for climate objectives.
Successive post-Lougheed Alberta governments have sold their souls and gave control of government and an uncomfortable amount of the regulatory process to industry itself. Justin Trudeau and his inner cabinet of the day were so badly suckered into TMX, which has become a gold-plated playground slide into climate disaster to appease Alberta's masters.
There are 30+ billion reasons why Canadian taxpayers should be concerned. Alberta blathers on and on decade after decade on pseudo sovereignty issues, but there are four seats at the separatist roulette table: the Alberta government, Albertans themselves, the feds and the powerful majority foreign-owned fossil fuel interests that have so deeply influenced the other three.
We need to electrify this nation and encourage the same in its export markets as soon as possible. The laws of supply and demand will do it for us sometime in the 2030s if Canada doesn't step it up. The economics of decarbonization have already multiplied into border tariffs on embedded carbon contained in products imported to the EU. The second largest market in the world (China) is set to shrink along with its imports very quickly as its population plunges from a low birthrate and virtually no immigration. Did Deloitte even bother to look into these issues, let alone check out the renewables sections in several IEA reports?
The link to the Deloitte
The link to the Deloitte report in the second paragraph does not provide the Deloitte report. Please fix it.
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