<article><p class="lead">A price rebound and an increase in export capacity have Canadian crude producers gearing up for the most promising year in nearly a decade. </p><p>Purse strings are being loosened after years of budget contractions and a renewed sense of optimism has Alberta's oil sector eyeing possible production records in 2022<b>.</b></p><p>Canada's heavy sour benchmark from January to November has more than doubled in price compared with the same period 2020, peaking at a seven-year high of $69/bl in October.</p><p>With one major pipeline project finally delivered after clearing years of regulatory and courtroom hurdles, exports are expected to trend higher. Flows to the US are already within striking distance of a record pace.</p><p>The 3.72mn b/d average crude exports to the US from January through September this year is just 90,000 b/d off the high during the same period in 2019, according to data from the Energy Information Agency (EIA).<b></b>But the final three months of 2021 yet to be reported coincide with the commissioning of Enbridge's 760,000 b/d Line 3 Replacement Project, which effectively adds a much-anticipated 370,000 b/d of new egress for shippers.</p><p>Another major export pipeline is entering its final year of construction, a remarkable feat given the waning political appetite for pipelines, including outright opposition in the case of British Columbia's (BC) provincial government. The 590,000 b/d Trans Mountain Expansion (TMX), combined with the existing 300,000 b/d line, will result in meaningful export capacity off the coast of BC and on to Asia-Pacific.</p><p>TMX will offer another alternative to shipping to the US and provide Canadian producers the clear path required to transition from protecting balance sheets to spending cash. In turn this will increase light and heavy crude production in Alberta, especially out of the vast oil sands region.</p><p>Alberta crude output is already at an all-time high, reaching 3.84mn b/d in October, the provincial regulator said. With two more months to report, the province is on pace for a record setting year, with plans by some of the biggest operators to push that higher yet in 2022.</p><p>Oil sands producers Cenovus and Suncor have both said production from their assets will rise by 4-5pc next year. The two producers plan to grow output to 800,000 b/d of oil equivalent (boe/d) and 770,000 boe/d, respectively, taking advantage of the rebound in prices and added takeaway capacity out of Canada.</p><p>Cenovus and Suncor will also be boosting their capital expenditures by about 20pc to C$7.5bn ($6bn) in 2022, a gain that would mark a turning point after a multi-year slump in Canada's crude sector that especially hit oil sands producers.</p><p>An expected investment of C$9bn in 2021 would signal the first increase in capital spending in the Canadian oil sands since 2014, according to industry advocate Canadian Association of Petroleum Producers (CAPP). While this remains a far cry from the C$34bn invested in 2014, it is up from C$7bn in 2020 and evidence that balance sheets are healthy enough to merit more spending after weathering the lows of the Covid-19 pandemic and economic slump.</p><p>Suncor is reviving the second train at its 194,000 b/d Fort Hills joint venture with Total and Teck Resources, with an expectation to nearly double output at the asset, which looks poised to finally meet its potential. About 10km (6 miles) east, Imperial Oil's star asset, Kearl, has scrapped the second annual turnaround. This, along with an increase in productivity, has enabled the mining project to achieve well above its 220,000 b/d nameplate capacity and approach 300,000 b/d in production.</p><p>More cash, more production and more export capacity have 2022 shaping up to be a notable year in Canada's oil sands, building off an unexpectedly strong 2021.</p><p class="bylines">By Brett Holmes</p></article>
