Market Imperial L.S.

Rising exports and wider differentials? A look at Canada's evolving export reality

Despite little change in the West Texas benchmark, Western Canadian oil prices slipped 2% in June, due to unfavourable changes in differentials.

The Synthetic Crude (SCO) premium narrowed from almost US$3 in May to about US$1 a barrel in June, lowering the average SCO price to just under US$80 for the month. The Western Canadian Select (WCS) discount widened from US$11.60 in May to US$13.20 last month, dropping the WCS average to US$65.50 a barrel.

Oil prices trend higher — setting the stage for Q2 earnings

West Texas, Brent, Canadian crudes and condensate prices are updated weekly and monthly on our website.

Real-time benchmark prices from TradingView are posted on our “Real-Time Dashboard”. Differentials for Canadian crudes and condensate reflect the previous day’s close.

Historical daily data is available for download as part of our “Oil and Gas Prices” dataset.

SAGD vs CSS — What's the difference?

Alberta currently produces about 4 million barrels of crude oil per day. About 10% is conventional crude, and the remaining 90% is unconventional oil, in the form of bitumen. About half of that bitumen is produced in-situ, leaving the sand in place.

In-situ oil sands production is divided into three categories — Primary, Enhanced and Thermal.

“Primary Oil Recovery” involves pumping the oil out of the ground, similar to conventional oil recovery.

“Enhanced Oil Recovery” (EOR) implies the oil was “pushed” or “forced” out of the ground using water or a non-condensible gas, like carbon dioxide.

“Thermal Recovery” involves injecting steam into the ground, heating and mobilizing the bitumen towards a production well.

Primary and EOR only account for 10% of all in-situ production. The vast majority of in-situ production is produced thermally.

Below the Surface − Six innovations that unlocked in-situ production from the oil sands

While mining is often seen as the “face” of the oil sands industry, it only accounts for half of all oil production from the oil sands. The other half is extracted deep underground, with very little land disturbance, very much like conventional oil.

This process referred to as thermal in-situ extraction — "thermal" because steam is used to mobilize the oil, and "in-situ" meaning the oil is recovered in-place, leaving all the sand behind.

There are about two dozen commercial thermal in-situ facilities currently operating in the oil sands, mostly located on Alberta's eastern edge, stretching from just south of the Cold Lake area, to as far north as Fort McKay.

Room for growth — AER sees big gains in SAGD production by 2030

BITUMEN PRODUCTION DIPS AGAIN IN MAY

According to the Alberta Energy Regulator (AER), total bitumen production declined again in May, falling 277,000 bbl/day to an average of 3.22 million bbl/day.

SLOWER GROWTH FOR MINING

In contrast, mined output is expected to gain less than 100,000 bbl/day over the same time frame, topping out at about 1.75 million bbl/day by 2030.

Around the oilpatch this week — Oil sands production tracking towards new record highs

NEW SA-SAGD EXPANSION ONLINE IN COLD LAKE

Earlier this week, Imperial reported first oil out of its Grand Rapids expansion at Cold Lake, the first full-scale commercial deployment of solvent-assisted steam-assisted gravity drainage (SA-SAGD).

The company says it expects Grand Rapids to use 40% less steam than its other Cold Lake operations, which use cyclic steam stimulation (CSS) to extract bitumen in-situ. CSS production from Cold Lake currently operates at a steam-to-oil ratio (SOR) of about 4.5.

Grand Rapids production is expected to ramp-up to 15,000 bbl/day within the next few months.

Two mining records and two SAGD expansions: An update from Imperial on oil sands production growth

MORE RECORDS BROKEN AT KEARL
Kearl also reported a strong second quarter, averaging 255,000 bbl/day, up from 217,000 bbl/day for the same time last year. After a record finish to 2023, Imperial says the first half of 2024 was another new record for the oil sands mine, averaging 266,000 bbl/day, thanks to higher mine fleet productivity.

The company also says Kearl completed its latest maintenance turnaround in record time, and has now reduced planned maintenance outages to just 19 days annually, down from 70 days in 2021. Operating costs at Kearl averaged $22 a barrel for the quarter.

CEO Brad Corson says Kearl is "well-positioned for a strong second half", as his company continues to make progress towards lowering operating costs to $20 a barrel. Full-year production guidance for the mine was left unchanged at 275,000 to 285,000 bbl/day.

A Record Q3 at Imperial — CEO Brad Corson hints at future growth plans at Kearl and Cold Lake

Imperial Oil reported a near-record third quarter last week, thanks to strong production numbers out of Kearl and Cold Lake.

LOOKING AHEAD TO 2025

Total upstream production averaged 447,000 boe/day, the highest third quarter in over 30 years. The company is planning to release more details on next year's production targets and capital spending on December 12, 2024.

Imperial banks on higher spending and more production at Kearl and Cold Lake in 2025

At this week's 2025 Guidance webcast, Imperial Oil says it's gearing up for a big increase in production growth and spending at Kearl and Cold Lake over the next few years, all while lowering operating costs.

MORE DETAILS TO COME IN APRIL

Including Kearl and Cold Lake, Imperial set a 2025 spending budget of about $2 billion, up from $1.85 billion forecasted to be spent in 2024. Full-year upstream production guidance, including both Kearl and Cold Lake, was set at 445,000 bbl/day (gross), up from a projected 431,000 bbl/day in 2024.

The company says it plans to provide more details on future growth plans at its next Investor Day meeting, to be held in mid-April in Toronto.