The first new oil sands project in Alberta since 2014 has started commercial production, aiming for a daily average of 80,000 barrels once it ramps up. The Blackrod project, led by International Petroleum Corp., moved to the first phase of production despite the peak oil demand narrative that has dominated the past decade, especially in Canada.
Canadian oil sands have been in the focus of transition attention as especially energy-intensive, meaning emission-intensive, and as a high-cost way of extracting crude oil from the ground. Under activist and political pressure, Canadian oil sands operators have invested more than most into reducing their carbon footprint and maximizing production efficiency to the point that breakeven costs have fallen below some parts of the U.S. shale patch, a 报告 from Enverus recently revealed.
International Petroleum Corp’s Blackrod project is a case in point. The project began commercial production at the end of May this year, and the operator plans to ramp up to 30,000 barrels daily by late 2027, Bloomberg reported this week, noting this would be earlier than originally planned. The start of commercial production came earlier than scheduled—the scheduled start date was the third quarter of this year—and the company stayed mostly within its budget of $1.2 billion, with the cost overrun at what is considered a moderate $5 million. Related: Why the Moment for a Deal Could Not Be Better for Iran
The start of production coincides with a surge in interest in more oil pipeline capacity in Canada as the country becomes a focus of energy industry attention due to events in the Middle East. The return of energy security as the top priority for both energy producers and buyers has put the oil sands of Alberta in the spotlight, and even Big Oil, which sold and left a few years ago, is now returning.
In May, Shell said it would buy Canada’s ARC Resources in a $16.4-billion deal that will add roughly 370,000 barrels of oil equivalent per day to its production and strengthen the supermajor’s position in one of the continent’s most strategic gas corridors. The acquisition gives Shell access to roughly 2 billion barrels of reserves while bolstering supply feeding LNG Canada, the export project Shell operates with a 40% stake and increasingly views as a cornerstone of its Asia growth strategy.
TotalEnergies, Norway’s Equinor, ConocoPhillips, and BP are also looking at acquisition opportunities in Canada, Reuters reported in May as the Strait of Hormuz crisis entered its third month with no end to the blockade in sight at the time.
Back then, the publication cited unnamed sources as saying the four majors had asked investment banks to compile lists of suitable acquisition targets for them in the Canadian oil patch. There is no guarantee deals will be made, but the fact that there is interest from supermajors demonstrates a changing sentiment toward the country with some of the most abundant oil and gas reserves in the world. Falling breakeven costs must have helped, too.
Oil sands dominate Canada’s oil resource base, accounting for almost 97% of the total, or 167 billion barrels in proven recoverable reserves. With breakeven costs falling consistently, oil sands operators have managed to expand production despite the political and activist pressure and a growing burden of emission-related red tape that has made greenfield projects considerably more challenging to pursue, with producers betting entirely on expansion in existing projects.
Despite all the challenges, last year, Alberta 据报道 a record oil sands output of 3.67 million barrels per day in July. This year, production is seen rising further, with the Trans Mountain pipeline fully booked and its operator planning to add capacity in response to the strong demand from producers. The oil sands are roaring back in vogue.
作者：Irina Slav，来源：Oilprice.com
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