Market Snapshot: Major Producers Continue to Dominate Western Canadian Crude Oil Production

Release date: 2015-11-10

Despite increasing levels of crude oil production, the overall number of oil producers in western Canada fell by 33 per cent from 919 in 2008 to 615 in 2014. The dominance of major producers over western Canadian crude oil production continued to grow, as their share of operatedFootnote 1 production increased from 61 per cent in 2008 to 69 per cent in 2014. Over the same period, intermediates, juniors, emerging juniors, and marginal producers all saw their shares shrink.

Figure Sources and Data

Sources: Divestco, NEB calculations

Description: The above chart depicts the shares of western Canadian crude oil production attributable to different sized companies from 2008-2014. The share of production provided by major producers increased from 61 per cent to 69 per cent. All other producers saw a drop in their market shares: intermediates declined from 25 per cent to 21 per cent, juniors from ten per cent to nine per cent, emerging juniors from three per cent to two per cent, and marginal producers from less than one per cent to an even smaller figure.

Company Size Operated WCSB Oil Production (bbl/d)
Marginal less than 100
Emerging Jr. 00 - 1 000
Junior 1 000 - 10 000
Intermediate 10 000 - 100 000
Major more than 100 000

In 2014, bitumen represented two-thirds of all crude oil production in western Canada, compared to just over half of production in 2008. Oil sands projects require billions of up-front capital investment and have long lead times before production begins. As a result, these projects tend to be operated by major producers, as they are able to attract investment capital and possess stable cash flows to support developing projects before they begin generating revenue. The majors’ ability to dominate oil sands production growth has led to the increase in their share of total production.

Intermediates are also capable of developing the oil sands, but their projects have been built at smaller scales and have not resulted in an increase in intermediates’ share of oil production. This is in contrast to the natural gas market, in which large mid-size companies have gained significant share of total tight gas production in western Canada.

Many marginal and emerging junior producers struggle to attract the investment capital required for modern oil development – such as oil sands or tight oil projects – and some have exited the western Canadian market. As these producers leave, their assets are purchased by larger producers, specifically juniors and intermediates that can revitalize conventional production through water floods or tight oil development.

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