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Canadian Oil Sands Emissions: A Steady Course Amid Growth

In a recent analysis by SP Global Commodity Insights, it was revealed that absolute greenhouse gas emissions from Canadian oil sands production experienced a minimal increase of less than 1% in 2024. This slight rise coincides with a notable growth in production, which rose by an impressive 150,000 barrels per day (b/d). The report highlights a continuing trend of improving production efficiency, which is curbing the growth of absolute emissions during a period of increased activity in the oil sands sector.

Emissions vs. Production Dynamics

The year 2024 marked an important milestone in the Canadian oil sands narrative. While total greenhouse gas emissions recorded an uptick of less than 1 million metric tons of CO2 equivalent (MMtCO2e), production levels surged. Since 2019, emissions have risen by nearly 5 MMtCO2e, averaging about 1% annually, while production has soared by close to 400,000 b/d during the same time frame. This is particularly striking when compared to the previous five years (2015-2019), when emissions increased by nearly 12 MMtCO2e alongside a production growth of 600,000 b/d—an average annual increase of roughly 4%.

SP Global’s Chief Canadian Oil Analyst, Kevin Birn, commented on this trend, noting that operators in the oil sands industry are focusing on optimizing production. This strategy has resulted in more output with only modest increases in absolute emissions.

Decreasing Emissions Intensity

The study indicated that the average greenhouse gas intensity of oil sands production has notably declined by 3% in 2024, sinking to 57 kgCO2e per barrel. The decline in emissions intensity is attributed to efficiency improvements across various extraction methods employed in the oil sands sector. Since 2009, the average GHG intensity has plummeted by 28%, translating to a decrease of nearly 22 kgCO2e per barrel of marketable product.

Despite the benefits of increased efficiency, the report notes that the absolute emissions grow slightly due to stronger growth in mined synthetic crude oil (SCO) production. This production segment's expansion is outpacing efficiency gains, indicating an ongoing need for further improvements in emissions control as production continues to climb.

Future Projections

Looking ahead, SP Global Commodity Insights anticipates that while absolute emissions may continue to rise, it will occur at a slower rate moving forward. Forecasts suggest that expected reductions in greenhouse gas intensity are likely to be modestly outpaced by production additions. However, there exists the potential for emissions to stabilize or even decline slightly, particularly if future production growth does not exceed current projections.

As Celina Hwang, Director of Crude Oil Markets at SP Global, points out, the oil sands sector has shown stronger-than-expected production growth in recent years. This trend has led to upward revisions of the annual 10-year production outlook for four consecutive years. While the concept of peak emissions in the oil sands remains alive, each year of unexpected growth further pushes this prospect into the future.

Conclusion

The dynamics of the Canadian oil sands production and emissions are indicative of a sector grappling with both the demands for increased output and the urgent need to mitigate environmental impacts. As efficiency measures take root, the oil sands industry appears well-positioned to manage its emissions growth, albeit with significant challenges ahead. Only time will tell how this balance will evolve in the face of growing production and environmental accountability.