Canada could lead the world in oil production growth in 2024

Canada could lead the world in oil production growth in 2024
Canada’s oil output is set to jump by about 10 per cent over the next year and mark an all-time high for the country's production. (Kyle Bakx/CBC)

Canada’s oil output is projected to surge by a significant 10 per cent over the next year, positioning the country as a dominant force in global oil supply growth.

By the close of 2024, Canada is expected to ramp up its daily oil production from the current 4.8 million barrels per day (bpd) to approximately 5.3 million bpd, marking an unprecedented peak in Canadian oil production, according to recent data from S&P Global Commodity Insights.

Alberta’s oilsands, a primary contributor to the nation’s oil production, will be a significant driver behind this surge. However, growth is also anticipated throughout Western Canada and in offshore facilities near Newfoundland and Labrador.

“Half a million is a lot,” commented Kevin Birn, S&P’s chief analyst for Canadian oil markets, emphasizing the magnitude of the expected increase. “It’s bigger than a lot of countries produce in the world.”

Crews work on the Trans Mountain Pipeline expansion project in this undated file photo.

The Catalyst Behind the Growth

The anticipated sharp spike in oil output over the forthcoming year is partly attributed to a dip in this year’s production, which was hampered by extended maintenance periods at certain oilsands facilities.

Coinciding with the country’s production apex is the impending launch of the expanded Trans Mountain pipeline. This expansion, currently in its final construction phases, promises to triple the pipeline’s throughput, increasing its capacity from 300,000 bpd to an impressive 890,000 bpd.

Interestingly, major oilsands corporations aren’t focusing on increasing their output capacities. “Large oilsands companies are not ramping up their spending to pump more oil out of the ground,” Birn noted. Instead, they’re innovating and optimizing their existing infrastructures to work at full capacity.

However, Birn has words of caution for the industry. He believes that this spike in production might be ephemeral, predicting a possible stagnation post-2024. “This could be the last really large hurrah before we see a material slow down in Western Canada supply growth,” Birn asserted. He anticipates the leveling off to commence around 2025 or 2026.

Oil exploration

Global Perspective

From a global standpoint, 2024 might witness Canada as the primary contributor to worldwide crude oil production growth. Canada’s forecasted jump of approximately 500,000 bpd surpasses the 400,000 bpd growth predicted for the U.S.

Other nations like Guyana and Brazil are also set to up their production by around 400,000 bpd from Latin America next year.

A recent Deloitte Canada report underscores Canada’s phenomenal growth, stating that the country’s anticipated growth in the next two years could surpass the total growth observed over the past five years.

Oil spillage cleaning

Environmental Concerns

With oil production on the rise, the federal government is taking measures to keep environmental repercussions in check. This fall, the government plans to release draft regulations designed to set limits on emissions from oil and gas operations, aiming to progressively reduce them over time.

Oilsands alone account for roughly 11 per cent of Canada’s total greenhouse gas emissions. When combined with the rest of the oil industry and the entire natural gas sector, the figure climbs to 15 per cent.

Nevertheless, a silver lining from S&P Global Commodity Insights’ analysis in August reveals that total oilsands emissions remained stable in 2022, despite a slight uptick in production.