Wall Street hikes oil sands outlook for the first time in five years

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Good morning!

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They call it the “age of gentrification.”

That is why, for the first time in five years, Wall Street analyst S&P Global Commodity Insights is raising its forecast for the Canadian oil sands.

Oil sands production is now projected to reach 3.7 million barrels per day by 2030, half a million barrels per day more than today and 140,000 more than last year’s forecast.

Selina Huang, North American Crude Oil Markets Director, and Kevin Byrne, Canadian Oil Markets Senior Analyst, who wrote the report, write:

“A year later, one might conclude that the response to the price hike took longer than expected to have its usual effect,” they said.

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They said capital expenditures in 2022 reached the highest level since 2015 among the four largest oil sands producers and could rise in 2023. However, much of this went to keep up with inflation and not to build new projects.

They said that what will drive the growth of the oil sands this time is not new mega projects, but improved efficiency and improved production.

“Canada’s oil sands has entered the ‘age of improvement,’” Byrne said. “Learning by doing and incremental improvements account for nearly 90 percent of our overall production forecasts.”

The remaining 10 percent comes from removing bottlenecks that limit production flow.

The last time oil prices were this high, Byrne said, the oil sands experienced a development boom. This time by optimizing their already large base of assets, producers can materially increase production while maintaining the capital discipline investors want.

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“High oil prices have generated record revenue for the Canadian oil sands,” Hwang said. “Although producers continue to demonstrate capital discipline, strong balance sheets now give oils and oils companies renewed confidence regarding their capital spending intentions.”

S&P Global expects Canada to continue its record oil production for the rest of the decade. Output growth will begin to slow in the mid-to-late 2020s, and a “very shallow decline” will only begin to appear in the early 2000s. It will be particularly shallow, analysts said, because of the long, flat production typical of oil sands.

Oil prices have fallen recently due to concerns about demand in a slowdown in the global economy. But the International Energy Agency It says the market pessimism is in stark contrast to its forecast of a tightening market in the second half of this year, as it expects demand to exceed supply by about 2 million barrels per day.

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The Canadian Association of Petroleum Producers (CAPP) expects investment in oil and gas production in Canada to jump 11 percent this year, to $40 billion. Oil sands investments are expected to reach $11.5 billion.

In addition, the completion of the Trans Mountain pipeline expansion this year is expected to provide producers with 590,000 bpd of export capacity.

The only fly in the ointment for the S&P outlook could be the federal cap on oil sands emissions.

“If emissions targets prove too stringent, and unachievable by industry, further investment – however modest – may be at risk,” write Huang and Byrne.

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The saga of the US debt ceiling continues, bringing one’s mind back to other times when lawmakers came close to default.

Congress has raised, extended, or modified the debt limit 78 times since 1960, 49 times under Republican presidents and 29 times under Democratic presidents.

At each of these times, lawmakers passed a deal that averted default.

But in 2011, they got really close. Just like today, if there was a massive slope that turbulent markets in the hope of default.

Congress finally resolved the crisis by passing the Budget Control Act, but that wasn’t the end of it. After the law was passed, Standard & Poor’s downgraded the United States’ long-term credit rating for the first time ever from AAA to AA+, saying the fiscal plan had failed.

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The latest in this year’s saga. US President Joe Biden and Republican Congressman Kevin McCarthy seem close to closing a deal today, reports say, but the June 1 deadline is fast approaching. time is passing.

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It is estimated that approximately 6.2 million Canadians over the age of 15 have one or more disabilities related to pain, flexibility, mobility, or mental health. However, many of them do not benefit from a Registered Disability Savings Plan (RDSP). Susan O’Brien has the nuts and bolts of this helpful tool designed to support parents and individuals with disabilities to provide long-term financial security. Find out more

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Today’s Posthaste is written by Pamela Heaven, @employeewith additional reporting from The Canadian Press, Thomson Reuters, and Bloomberg.

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