London — Some 16% of Alberta's crude oil production remains offline, down from a peak of 22% -- or 880,000 b/d – at the start of the coronavirus pandemic, the western Canadian province's energy minister said Oct. 13.
"It is coming back online slowly," Minister Sonya Savage told the Energy Intelligence Forum.
But she conceded that a full recovery in Alberta's oil sands will require higher prices, as well as a rebound in demand in the US, which buys about 97% of Canada's crude exports.
S&P Global Platts assessed Western Canadian Select in Hardisty, Alberta, at $31.99/b on Oct. 9, compared to a low of $8.03/b on April 1 during the depths of the coronavirus crisis and the start of a one-month price war between Saudi Arabia and Russia.
But that is still below pre-pandemic levels of around $40/b in early January, and the depressed prices, along with limited pipeline takeaway capacity, have stifled investment in the oil sands.
"To get production fully back to where it was, we're going to be needing [higher prices], demand and upstream investment," Savage said.
Should those market conditions be realized, Alberta should be well-positioned to regain market share, and even increase it, as oil sands crude is similar in properties to the heavy crude from declining producers Venezuela and Mexico, she said.
"We see that there are many competitive advantages to the oil sands," she said. "Unlike other sources of oil, [heavy crude] is in demand."
Canada produced 3.76 million b/d in July, the vast majority of it from Alberta, according to the latest official statistics from the Canadian Centre for Energy Information.