Canada’s oil production dropped to its lowest level since the 2016 wildfires due to the novel coronavirus (COVID-19) and quarantine measures, according to the US Energy Information Administration (EIA).
Canada was the world’s fourth-largest producer of petroleum and other liquids in 2019, but its oil production declined 20% from its 2019 average of 5.5 million barrels per day (bpd) to around 4.4 million bpd in May 2020, the EIA said in a statement on Thursday.
The steep decline was as a result of low oil prices, reduced demand for crude oil for refined petroleum products in Canada and the US - its top export destination, and production curtailments imposed by the Alberta government against low prices.
Alberta, Canada's province that produced more than 80% of the country's crude in 2019, announced on May 27 that it would voluntarily reduce its oil production by around 1 million bpd to support prices as part of the OPEC+ deal, although the country is not a part of the 23-nation group.
The government of Alberta is also extending the duration of "imposing production curtailments to reduce associated bitumen production and to alleviate increasing crude oil inventories and growing constraints on export pipeline takeaway capacity," through the end of 2020, the EIA said.
The administration estimates that Canada’s production of petroleum and other liquids fell by 700,000 bpd to 4.9 million bpd in April, from 5.6 million bpd in March 2020.
"This decline is similar to the 640,000 bpd decline from April to May 2016, when wildfires in the Fort McMurray area forced a temporary shutdown of some oil sands projects in Alberta," it added.
In May 2020, Canada’s oil production was estimated to fall by an additional 560,000 bpd to 4.4 million bpd in May, marking its lowest production since mid-2016.
"EIA forecasts that Canada’s production will remain less than its 2019 average through the remaining months of 2020 and the first half of 2021 as lingering effects of lower global petroleum demand persist," the statement said.
The administration said it expects Canada’s production of petroleum and other liquids to average 5.1 million bpd in 2020 and 5.5 million bpd in 2021.
By Ovunc Kutlu