Western Canada’s crude oil production, like in many other regions of the world during the spring of 2020, had to pull back sharply in response to the price and demand chaos brought about by COVID-19. By the end of 2020, oil production almost everywhere remained much lower or was being carefully managed to avoid creating another supply glut. In contrast, production in Western Canada has almost fully rebounded, and is being primed to increase to what could be all-time highs this year. With Alberta’s oil sands producers renewing their role as the long-standing driver of oil supply growth and the recent suspension of production limits in the province, the stage is set for us to review the most recent oil supply developments and future growth prospects.
Crude oil production in Western Canada has been a favorite topic of the RBN blogosphere in the past year — sometimes for less-than-pleasant reasons. We described what was happening to supplies from Alberta’s oil sands in our two-part Rock Bottom series last March and April, when COVID was rocking the oil world. Those blogs examined the ultra-low pricing of the heavy oil price benchmark, Western Canada Select (WCS), and how the low prices were driving widespread shut-ins at major oil sands production sites. After prices began to recover, prompting some gains in oil sands production, we updated you with a four-part, late-summer series (Never Say Goodbye) on what that supply recovery meant for utilization of Canada’s oil export pipelines. That was topped off in early November with the one-off blog Livin’ on a Prayer, which described the suspension of nearly two years of oil production limits that had been imposed by the province of Alberta since January 2019.
The start of a new year gives us a perfect opportunity to both look back at how Western Canada oil supplies evolved over the course of (most of) 2020 and look ahead at what might happen in 2021. The production trends certainly have been much more positive since last spring, with combined oil supplies from Canada’s four Western provinces (British Columbia, Alberta, Saskatchewan, and Manitoba) recovering to 4.24 MMb/d as of November 2020 (dashed black box in left graph in Figure 1), the last month of reported data. This is only 139 Mb/d short of the all-time monthly high of 4.8 MMb/d (dashed pink box) set in December 2019 and a staggering 883 Mb/d above the COVID-induced low of 3.36 MMb/d in May 2020 (dashed red box).
Join Backstage Pass to Read Full Article
