The next decade of oil sands growth is expected to look markedly different than what we’re used to, according to Kevin Birn of IHS. As discussed in Birn’s article on the IHS Energy Blog, once the oil sands projects currently under development come to completion by 2018, the expansion of existing facilities will be the primary focus of producers looking for opportunities to grow.
Birn highlights key reasons for this expectation:
- The uncertainty of future pipeline capacity – further delays may slow the price recovery and affect the timing of future investments and growth expectations.
- The abundance of oil storage.
- The potential for US tight oil to respond to higher prices.
- The potential for OPEC members to maximize production instead of managing supply.
Due to lower activity in the industry, costs in the oil sands have fallen. Producers and operators have been able to identify inefficiencies and boost utilization rates, allowing them to get more out of existing facilities. As a result, “IHS expects that over 80% of future activity in our outlook will be underpinned by expansions of existing facilities” says Birn. “These being well understood, quicker to first oil, and cheaper to construct.”
“IHS expects that over 80% of future activity in our outlook will be underpinned by expansions of existing facilities.”
Several producers have already identified the value of a multi-phased approach to asset development. Vista has executed a number of facility expansion projects, such as this 50,000 BPD SAGD expansion, and believes the need to expand existing facilities highlights the importance of engineering for an asset’s total life cycle from the first project. Using designs and equipment with a proven record of success in existing facilities can substantially reduce development and construction costs down the road.
With an extensive portfolio of major capital, facility modification and debottlenecking projects, Vista is well positioned for whatever the future of the market holds.
Click here to read the full article on IHS Energy’s blog.