June 2020

Offshore Oil Production

Newfoundland and Labrador leads oil production outside of Western Canada

Newfoundland and Labrador (NL) is the only Atlantic Canadian province currently producing oil, and the largest producer outside of Western Canada. Roughly 6% of Canada’s oil production comes from NL.

In-Situ Production in the Oil Sands

In-situ projects lead growth in the Canadian oil sands

In Western Canada, about 80% of oil sands deposits are located more than 75 metres underground. These deposits cannot be developed through open-pit mining as too much rock and soil would need to be removed to access the oil sands. At this depth, extracting oil sands is only workable using what is referred to as in-situ methods, which combines drilling and steam injection.

Mining the Oil Sands

Incremental growth projected for oil sands mining

Oil sands mining is expected to expand modestly in the future relative to oil sands in-situ projects. According to the Canada Energy Regulator (CER), oil sands mining production will increase by 13% in the next 20 years, from 1.5 to 1.7 million barrels per day.

This growth is not expected to come from new projects, as no new mines are under construction. Rather, this growth will come from expanding existing mines. Many of the projects that are producing today are expected to continue to do so through 2040 and beyond.

What is the Future of Canadian Oil?

The future of crude oil development in Canada is an open question. Government, industry and civil society have mixed feelings about how to balance the environmental impacts and economic benefits of fossil fuel resource development. It’s hard to predict what will happen to the industry, as projections vary greatly from source to source. To complicate matters, the future will not only be shaped by Canadian climate policies, but also by factors that affect oil supply and demand worldwide, such as recovery from COVID-19, new low-carbon electricity and transportation options, international economic growth, and oil production in the US.