Canadian Natural Resources president says oilsands growth dependent on new West Coast pipeline

Pump Jacks extract crude oil from oil wells

Canada’s oilsands have significant expansion potential but the basin’s long-term growth outlook is dependent on the construction of a new crude export pipeline to the Pacific coast, the president of Canadian Natural Resources said on Thursday.

Scott Stauth, who heads the country’s largest oil and gas producer, made the remarks on a conference call with analysts after Canadian Natural announced it had exceeded first-quarter profit expectations, fueled in large part by higher production in its oil sands segment.

“We need that pipeline to be able to grow oil sands in a significant way,” said Stauth, referring to an Alberta government proposal for a new 1 million-barrel-per-day crude oil pipeline to British Columbia’s northwest coast.

Like other oil sands producers, Canadian Natural’s production has been growing. Its total output increased to 1.64 million barrels of oil equivalent per day in the three months ended March 31, from 1.58 million boepd a year earlier.

At its Jackfish thermal oil sands project, production averaged a record 134,396 barrels per day, exceeding its maximum output capacity. The company said subsequent to the quarter, for the month of April, facilities were also running above full capacity, with output from all of its oil sands assets reaching 630,000 barrels per day.

Canadian oil producers are eager for more takeaway capacity for the country’s oil output. A new 550,000 bpd pipeline proposal by Canadian company South Bow and its U.S. partner Bridger Pipeline aims to increase Canada’s crude exports to the U.S. by reviving parts of the old Keystone XL line. There are also capacity-enhancing projects planned for both the Trans Mountain Pipeline and Enbridge’s Mainline.

Pipeline proposal multiply

Stauth said Canadian Natural has long-term growth opportunities, including a 150,000 bpd expansion at its Jackpine oil sands site, which remains on hold until the company is confident it has the pipeline capacity to support them.

Long-term growth is also dependent on the outcome of ongoing talks between Canada’s federal government and Alberta, which have been trying to strike a deal on an industrial carbon-pricing policy, Stauth said, adding that he is hopeful an agreement will be reached soon.

Canadian Prime Minister Mark Carney has previously said a new West Coast pipeline would be contingent on oil sands producers constructing a massive carbon-capture-and-storage project to bring down their greenhouse gas emissions profile. Stauth made no mention, however, of that project or any environmental goals on Thursday.

Canadian Natural reported adjusted profit of $1.17 per share for the three months ended March 31. Analysts on average had expected profit of $1.01 per share, according to data compiled by LSEG.

The company’s shares were down nearly four per cent at $59.82 in Toronto near midday on Thursday.

(Reporting by Amanda Stephenson in Calgary and Varun Sahay in Bengaluru; Editing by Pooja Desai and Matthew Lewis)