Canadian oil sands giants Suncor Energy and Cenovus Energy have both said that they intend to raise their capital expenditure and production in 2022.
The moves appear to be a bet that oil prices will continue to recover from last year’s lows, to which they crashed following the onset of the coronavirus (COVID-19) pandemic. Prices have strengthened considerably since then, and West Texas Intermediate (WTI) is currently trading at around $70 per barrel.
This relative oil price strength has been a boon to producers, including in the oil sands. While operators there are holding back from the major investments required to develop new projects, they have been ramping up production from existing assets and oil sands output is close to record levels at 5mn barrels per day (bpd).
Suncor said this week that it expects to spend CAD4.7bn ($3.7bn) in 2022, up from forecast capex of CAD3.8-4.5bn ($3.0-3.5bn) this year. The company anticipates producing 750,000-790,000 barrels of oil equivalent per day (boepd) in 2022, up by about 5% from its projected output in 2021 levels. The increase will be supported by the ramp-up of the Fort Hills oil sands project to full rates. Fort Hills has been operating below capacity owing to slope stability issues on the south side of the mine that were identified earlier this year.
Cenovus, meanwhile, said it anticipates spending for 2022 to amount to CAD2.6-3.0bn ($2.0-2.3bn), up from an expected CAD2.3-2.7bn ($1.8-2.1bn) this year. The company has earmarked CAD1.4-1.6bn ($1.1-1.2bn) of this for investments in the oil sands. It expects to produce 780,000-820,000 boepd next year, up from a projected 750,000-790,000 boepd in 2021. 

 

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