Higher oil prices are finally lifting the outlook for Canada's oilsands, 15 months after Russia's invasion of Ukraine, prompting S&P Global Commodity Insights' first upward production revision in over five years.
"Last year, we wrote that heightened energy security concerns (and higher prices) hadn't changed the outlook for Canadian oilsands. A year later, one might conclude that the response to higher prices just took longer than anticipated to have their usual effect," Calgary-based analysts Celina Hwang and Kevin Birn wrote in research published earlier this week.
S&P Global Commodity Insights now sees oilsands production reaching 3.7 million barrels per day by 2030, an increase of about 140,000 barrels per day above last year's outlook. That amounts to half a million barrels per day more than today, the research says.
"Looking to the future, Canada is expected to continue to post new record production and export levels," Hwang and Birn added.
They see production growth slowing in the late 2020s, before a "shallow decline" begins in the early 2030s, reflecting the long and flat production profile of typical Canadian oilsands assets.
While a mix of unease about the U.S. debt ceiling and tougher economic conditions have weighed on crude prices (CL=F), London-based research firm Energy Aspects recently called for the U.S. benchmark price to climb above US$100 per barrel by late summer, before rallying to more than US$115 in 2024.
Reflecting stronger prices, Hwang and Birn say oilsands producers are spending capital at the highest level since 2015, a trend set to continue if prices improve.
Canada's largest fossil fuel industry group has forecast investment in oil and gas production in Canada will jump by 11 per cent to hit $40 billion in 2023.
"The year 2023 may be one of the most pivotal moments in time for Canada's oil and natural gas industry," Canadian Association of Petroleum Producers president and CEO Lisa Baiton stated in March.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.