We forecast that Canadian liquids production was higher by 21 thousand b/d m/m but lower by 94 thousand b/d y/y in August at 5.41 mb/d. Synthetic production was lower m/m by 30 thousand b/d at 1.22 mb/d. We expect synthetic production to have declined further in September as autumn maintenance at Base Plant and Horizon reduced output. We expect that conventional production was lower m/m, by 37 thousand b/d, as the Hibernia offshore platform was taken offline for a second time during the month on 17 August. Hibernia resumed production on 27 September, which should support output in October.
PADD 2 refinery maintenance over September and October weighed on WCS differentials, dragging the average of the differentials lower versus WTI CMA, to -$12.42. This helped open the arb to Cushing, supporting flows. WCS differentials have weakened further at the start of the November trade cycle, slipping to -$16.58 vs WTI CMA on 9 October—the widest since 31 May with an outright WCS price below $40. Syncrude, however, has been strong, trading at a premium to WTI CMA amid upgrader works. We expect these trends to reverse by year end, with the 80 thousand b/d Sturgeon refinery—currently running Syncrude—set to switch to bitumen in December. We also expect other producers to switch to cheaper C5 for blending.
Canadian pipelines continue to face headwinds. Preconstruction work was stopped on Keystone XL until the outcome of another legal filing in Montana. In addition, the Canada Energy Regulator (CER) ruled in favour of several producers stopping Enbridge from offering committed linespace on the mainline system until the terms of the open season are clearly defined. Line 3, however, is set to go ahead as the Minnesota Supreme Court will not hear two additional cases looking for further review of the project. Despite the ongoing challenges facing several Canadian pipelines, roughly 0.27 mb/d of additional linespace is set to start up in the coming months: Enbridge Mainline (85 thousand b/d), Keystone (50 thousand b/d), Express (50 thousand b/d) and Plains Rangeland (80 thousand b/d).
Final data for July show that total Canadian liquids production was higher m/m by 10 thousand b/d at 5.39 mb/d (+0.14 mb/d y/y), in line with our forecast of a 35 thousand b/d increase m/m. Synthetic production was higher m/m by 99 thousand b/d, although bitumen production fell by 60 thousand b/d m/m. Conventional production was lower by 50 thousand b/d m/m as the Hibernia platform was offline for most of the month.