In a new report, RBC Capital Markets analyst Greg Pardy explains why Canadian oil sands production will continue to play a role in the global crude oil supply glut for years to come. New oil sand projects in Canada are still being completed, and production will continue to rise in coming years.

Timing Is Everything

According to Pardy, Canadian oil sands in-situ projects take 4-5 years from design to production, with mining projects spanning 7-8 years. For that reason, falling oil prices are not having as much of an impact on Canadian projects as they are having on U.S. drilling projects, which can be throttled up or down in a matter of months.

“As such, the oil sands will remain a part of the global excess supply picture over the next 2-3 years, although cycle-time dynamics cut both ways—once oil prices recover to levels which support the sanctioning of new projects, growth will take years to surface,” Pardy explains.

Growth Projections

RBC is projecting…

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