Canadian Oil Sands Production Expected to Reach All-time Highs this Year Despite Lower Oil Prices

Rhea-AI Summary

S&P Global (NYSE:SPGI) has raised its 10-year Canadian oil sands production forecast for the fourth consecutive year. Production is expected to reach a record 3.5 million b/d in 2025, representing a 5% increase from 2024, and exceed 3.9 million b/d by 2030—500,000 barrels higher than 2024 levels.

The analysis reveals favorable economics with 2025 half-cycle break-even prices ranging from US$18/b to US$45/b, averaging US$27/b on a WTI basis. Despite lower oil prices, producers are focusing on maximizing existing assets through optimization and efficiency improvements. However, potential export capacity constraints could emerge as early as next year, presenting a downside risk to the outlook.

Positive

• Fourth consecutive upward revision to annual oil sands production outlook
• Low break-even costs averaging US$27/b for oil sands production
• Production expected to grow 5% to record 3.5 million b/d in 2025
• Significant optimization potential in existing 3.8 million b/d installed capacity
• Higher plateau level projected with 3.7 million b/d expected by 2035

Negative

• Export capacity constraints could emerge as early as next year
• Lower oil price environment in 2025 poses potential risks
• Large up-front expenditures required for new oil sands projects

Insights

Energy Economics Analyst

S&P Global's upward revision of Canadian oil sands production reflects resilient economics despite lower oil prices, with breakeven costs as low as $18-45/barrel.

S&P Global Commodity Insights has issued its fourth consecutive upward revision for Canadian oil sands production, projecting record output of 3.5 million barrels per day in 2025—5% higher than 2024 levels. The forecast extends to 3.9 million barrels daily by 2030, representing a 500,000 barrel increase from 2024 and 100,000 barrels higher than their previous outlook.

What makes this projection particularly noteworthy is the economic resilience demonstrated by the sector. Despite a lower oil price environment, producers are achieving growth through optimization rather than new project development. The half-cycle breakeven for oil sands production ranges from $18 to $45 per barrel (WTI basis), with an average of approximately $27 per barrel. This explains why production can continue growing even during price volatility—existing assets require minimal additional investment to maintain profitability.

The key driver behind this resilience is the massive infrastructure installed between 2001-2017, providing ample opportunities for debottlenecking, reducing downtime, and increasing throughput. These optimization efforts often improve operational efficiency regardless of market conditions, further insulating producers from price fluctuations.

Two significant risks could derail this outlook: continued lower oil prices through 2025 and potential export constraints emerging as early as next year. Without additional pipeline capacity, transportation bottlenecks could limit the sector's ability to deliver this increased production to market—a critical concern given the higher production trajectory now expected.

S&P Global Commodity Insights Raises 10-year Oil Sands Production Outlook for 4th consecutive year

CALGARY, AB, June 24, 2025 /PRNewswire/ -- S&P Global Commodity Insights has raised its 10-year production outlook for the Canadian oil sands. The latest forecast expects oil sands production to reach a record annual average production of 3.5 million b/d in 2025 (5% higher than 2024) and exceed 3.9 million b/d by 2030—half a million barrels per day higher than 2024. The 2030 projection is 100,000 barrels per day (or nearly 3%) higher than the previous outlook.

The new forecast, produced by the S&P Global Commodity Insights Oil Sands Dialogue, is the fourth consecutive upward revision to the annual outlook. Despite a lower oil price environment, the analysis attributes the increased projection to favorable economics, as producers continue to focus on maximizing existing assets through investments in optimization and efficiency.

While large up-front, out-of-pocket expenditures over multiple years are required to bring online new oil sands projects, once completed, projects enjoy relatively low breakeven prices.

S&P Global Commodity Insights estimates that the 2025 half-cycle break-even for oil sands production ranged from US$18/b to US$45/b, on a WTI basis, with the overall average break-even being approximately US$27/b.*

"The increased trajectory for Canadian oil sands production growth amidst a period of oil price volatility reflects producers' continued emphasis on optimization—and the favorable economics that underpin such operations," said Kevin Birn, Chief Canadian Oil Analyst, S&P Global Commodity Insights. "More than 3.8 million barrels per day of existing installed capacity was brought online from 2001 and 2017. This large resource base provides ample room for producers to find debottlenecking opportunities, decrease downtime and increase throughput."

The potential for additional upside exists given the nature of optimization projects, which often result from learning by doing or emerge organically, the analysis says.

"Many companies are likely to proceed with optimizations even in more challenging price environments because they often contribute to efficiency gains," said Celina Hwang, Director, Crude Oil Markets, S&P Global Commodity Insights. "This dynamic adds to the resiliency of oil sands production and its ability to grow through periods of price volatility."

The outlook continues to expect oil sands production to enter a plateau later this decade. However, this is also expected to occur at a higher level of production than previously estimated. The new forecast expects oil sands production to be 3.7 million b/d in 2035—100,000 b/d higher than the previous outlook.

Export capacity—already a concern in recent years—is a source of downside risk now that even more production growth is expected. Without further incremental pipeline capacity, export constraints have the potential to re-emerge as early as next year, the analysis says.

"While a lower price path in 2025 and the potential for pipeline export constraints are downside risks to this outlook, the oil sands have proven able to withstand extreme price volatility in the past," said Hwang. "The low break-even costs for existing projects and producers' ability to manage challenging situations in the past support the resilience of this outlook."

* Half-cycle breakeven cost includes operating cost, the cost to purchase diluent (if needed), as well as an adjustment to enable a comparison to WTI—specifically, the cost of transport to Cushing, OK and quality differential between heavy and light oil.

Media Contacts:

Jeff Marn +1-202-463-8213, Jeff.marn@spglobal.com 

About S&P Global Commodity Insights

At S&P Global Commodity Insights, our complete view of global energy and commodity markets enables our customers to make decisions with conviction and create long-term, sustainable value.

We're a trusted connector that brings together thought leaders, market participants, governments, and regulators and we create solutions that lead to progress. Vital to navigating commodity markets, our coverage includes oil and gas, power, chemicals, metals, agriculture, shipping and energy transition. Platts^® products and services, including leading benchmark price assessments in the physical commodity markets, are offered through S&P Global Commodity Insights. S&P Global Commodity Insights maintains clear structural and operational separation between its price assessment activities and the other activities carried out by S&P Global Commodity Insights and the other business divisions of S&P Global.

S&P Global Commodity Insights is a division of S&P Global (NYSE: SPGI). S&P Global is the world's foremost provider of credit ratings, benchmarks, analytics and workflow solutions in the global capital, commodity and automotive markets. With every one of our offerings, we help many of the world's leading organizations navigate the economic landscape so they can plan for tomorrow, today. For more information visit https://www.spglobal.com/commodity-insights/en. 

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SOURCE S&P Global Commodity Insights

FAQ

What is S&P Global's new production forecast for Canadian oil sands in 2025?

S&P Global forecasts Canadian oil sands production to reach 3.5 million barrels per day in 2025, which is 5% higher than 2024 levels.

What are the break-even prices for Canadian oil sands production in 2025?

The 2025 half-cycle break-even prices range from US$18/b to US$45/b, with an overall average of US$27/b on a WTI basis.

How much higher is S&P Global's 2030 oil sands production forecast compared to previous outlook?

The 2030 projection is 100,000 barrels per day (nearly 3%) higher than the previous outlook, expecting to exceed 3.9 million b/d.

What are the main risks to Canadian oil sands production growth?

The main risks include potential export capacity constraints that could emerge as early as next year, and the lower oil price environment in 2025.

Why are oil sands producers able to maintain growth despite lower oil prices?

Producers can maintain growth due to favorable economics with low break-even costs, focus on optimization of existing assets, and ability to improve efficiency through operational improvements.