Canada should smash oil production record in 2022

Several countries will produce record amounts of oil next year

December 21, 2021, 9:17 am

Work on an a drilling rig near Moosomin

The International Energy Agency says Canadian oil production is set to hit a record 5.87 million barrels per day on average in 2022, which will be by far its highest level ever.

Efficiencies on some pipelines and expanded capacity on Enbridge's line thanks to the Line 3 replacement will help get that record production to market.

The IEA says that, while COVID-19 remains a threat to global growth, oil demand is expected to remain strong next year.

“The surge in new COVID-19 cases is expected to temporarily slow, but not upend, the recovery in oil demand that is underway,” the IEA said in its monthly report.

Global oil demand is forecast to grow by 5.4 million barrels per day in 2021 and a further 3.3 million barrels per day in 2022, reaching 99.53 million barrels per day — matching the 99.5 million barrels per day in 2019.

As oil prices improve, Canadian producers are planning increased oil production for next year.

Suncor Energy has said it plans to raise capital spending to $4.7 billion and production within the range of 750,000 to 790,000 bpd in 2022, a 5 per cent increase over this year.

Similarly, Cenovus Energy Inc. said it it will spend between $2.6 billion to $3 billion and raise total upstream production by six per cent in 2022.

Canada is not the only country forecast to hit record production levels. The U.S. and Brazil are also set to pump at their highest ever annual levels, lifting output from non-OPEC-plus countries by 1.8 million barrels per day in 2022.

“Saudi Arabia and Russia could also set records, if remaining OPEC-plus cuts are fully unwound,” the IEA said, referring to the self-imposed quotas by OPEC members and its allies. OPEC production is set to reach 45.6 million bpd on average in 2022, compared to 41.4 million barrels per day in 2021.

Already in November, supply was closing the gap with demand after the U.S., Canada, Saudi Arabia and Iraq led world oil production.

However, oil prices could slide from their highs heading into 2022 on higher inventories.

The IEA said its latest oil price assumption is roughly 15 per cent lower for 2022 than in last month’s report: Brent prices are expected to average US$70.80 per barrel in 2021 and US$67.60 per barrel in 2022.

The top five oil producing countries in the world in 2021 are the United States, Russia, Saudi Arabia, Canada, and Iraq.