By Mark Young, Evaluate Energy & CanOils

According to CanOils’ new report "The Canadian Oil Sands Outlook 2015" the Canadian Oil Sands industry looks set to have capacity to produce over 3 MMbbl/d by the end of 2015, with production likely to approach around 2.5 million bbl/d. Of these figures, a higher portion than ever will be controlled by non-Canadian operators (see note), with the trend of greater influence year-on-year by internationally-held companies continuing into 2015.

Assuming all scheduled new projects and expansions actually come onstream by Dec. 31, 2015, will see a 16.6% increase in overall year-end production capacity in the Canadian oil sands since 2014. 38.9% of this new total capacity will be operated by an entity that is owned (at least in the majority) by a non-Canadian company. This is the highest percentage by quite some margin since CanOils began tracking project capacities in 2008. This of course will be affected by delays and cancellations, so the full capacity will not be reached, but a significant increase will happen nonetheless.

The total has been growing steadily since 2012. In 2013, the increase can be attributed to two events. Firstly CNOOC’s acquisition of Nexen meant that the 72,000 bbl/d Long Lake in situ project shifted to international operatorship. Secondly, Imperial Oil’s Kearl Lake mine came onstream, adding another 110,000 bbl/d to the international contingent’s capacity total. 2014 saw OSUM Oil Sands taking the 10,000 bbl/d Orion project into Canadian hands by acquiring it from BP for Cdn$325 million. But this dip was more than offset by major expansions at Shell’s Jackpine mine (expanded to 200,000 bbl/d, additional capacity of 100,000 bbl/d) and at Devon’s Jackfish in situ project (to 105,000 bbl/d, additional capacity of 35,000 bbl/d).

2015, again assuming all planned projects reach completion by year-end, will see Imperial take over as the largest internationally-backed company in the Canadian Oil Sands. This is because of a planned expansion at the Kearl Lake mine, which is to double capacity to 220,000 bbl/d. This project alone highlights the fragility of making forecasts in the oil sands industry however, as production at the existing mine has recently been halted for several weeks due to some mechanical issues, potentially casting some doubt on an expansion to the mine reaching completion on time. Imperial is also scheduled to make a major 40,000 bbl/d expansion at Cold Lake next year.

Other planned increases in internationally-held production capacity within the oil sands industry in 2015 include Harvest’s brand new 10,000 bbl/d BlackGold project and ConocoPhillips’ 122,000 bbl/d expansion at its Surmont project, which will see capacity increase to around 150,000 bbl/d.

Note: “Non-Canadian operators” refers to companies that operate an oil sands project (in situ or mining operation) that are held in the majority by a non-Canadian entity. Included in this group are a handful of companies that are headquartered in Canada, such as Imperial (ExxonMobil, US), Nexen (CNOOC, China) and Harvest (KNOC, South Korea), but the majority shareholder of the company is internationally-based. Download the full 2015 Outlook from CanOils here.

Mark Young is a senior oil and gas analyst for Evaluate Energy & CanOils.