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Oil sands could maintain current production rates for more than 140 years
By Will Gibson
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Pipelines at a thermal in situ oil sands facility. Photo courtesy Alberta Energy Regulator
Investor interest in Canadian oil producers, primarily in the Alberta oil sands, has picked up, and not only because of expanded export capacity from the Trans Mountain pipeline.
Enverus Intelligence Research says the real draw — and a major factor behind oil sands equities outperforming U.S. peers by about 40 per cent since January 2024 — is the resource Trans Mountain helps unlock.
Alberta’s oil sands contain 167 billion barrels of reserves, nearly four times the volume in the United States.
Today’s oil sands operators hold more than twice the available high-quality resources compared to U.S. shale producers, Enverus reports.
“It’s a huge number — 167 billion barrels — when Alberta only produces about three million barrels a day right now,” said Mike Verney, executive vice-president at McDaniel & Associates, which earlier this year updated the province’s oil and gas reserves on behalf of the Alberta Energy Regulator.
Already fourth in the world, the assessment found Alberta’s oil reserves increased by seven billion barrels.
Verney said the rise in reserves despite record production is in part a result of improved processes and technology.
“Oil sands companies can produce for decades at the same economic threshold as they do today. That’s a great place to be,” said Michael Berger, a senior analyst with Enverus.
BMO Capital Markets estimates that Alberta’s oil sands reserves could maintain current production rates for more than 140 years.
The long-term picture looks different south of the border.
The U.S. Energy Information Administration projects that American production will peak before 2030 and enter a long period of decline.
Having a lasting stable source of supply is important as world oil demand is expected to remain strong for decades to come.
This is particularly true in Asia, the target market for oil exports off Canada’s West Coast.
The International Energy Agency (IEA) projects oil demand in the Asia-Pacific region will from 35 million barrels per day in 2024 to 41 million barrels per day in 2050.
The growing appeal of Alberta oil in Asian markets shows up not only in expanded Trans Mountain shipments, but also in Canadian crude being “re-exported” from U.S. Gulf Coast terminals.
According to RBN Energy, Asian buyers – primarily in China – are now the main non-U.S. buyers from Trans Mountain, while India dominates purchases of re-exports from the U.S. Gulf Coast. .
BMO said the oil sands offers advantages both in steady supply and lower overall environmental impacts.
“Not only is the resulting stability ideally suited to backfill anticipated declines in world oil supply, but the long-term physical footprint may also be meaningfully lower given large-scale concentrated emissions, high water recycling rates and low well declines,” BMO analysts said.
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