Canadian oil sands production will reach a record 3.5 million b/d in 2026, up roughly 100,000 b/d, or 3%, from 2025, according to S&P Global Energy. It would mark the 25th consecutive year of growth for the basin.

Under the firm's current outlook, output rises to about 3.9 million b/d by the early 2030s before broadly plateauing.

The trajectory reflects a quarter century of steady expansion. Annual production stood at about 300,000 b/d in 2001 and has increased every year since, with the single exception of 2020, when the COVID-19 pandemic curtailed output.

Where does the 2026 growth come from?

Most of the anticipated increase comes from optimization of existing installations rather than sanctioned new builds. Much of Canada's current oil sands capacity was constructed between 2009 and 2018, and construction of large new installations has been limited in recent years.

S&P Global noted, however, that renewed interest in capacity additions through new construction would create additional upside to the longer-term outlook.

"The Canadian oil sands has proven to be a resilient source of supply despite periods of low oil prices, regional price volatility and uncertainty over future Canadian energy and climate policy," said Kevin Birn, chief Canadian oil markets analyst at S&P Global Energy.

"The question today is not whether the oil sands will continue to grow, but rather how much additional growth could come should new projects once again come forward," Birn said.

What could push output above the plateau?

S&P Global cited several factors supporting the longer-term outlook:

• Announced plans for expanded pipeline export capacity
• Greater clarity, reduction, and extension of carbon pricing through 2040
• Commitments to accelerate reviews of projects considered to be in the national interest
• Potential changes to fiscal terms for new oil sands projects

The analytics firm also said Canadian energy production is increasingly viewed as a source of national security and economic growth amid the deterioration in Canada-US trade relations over the past 18 months.

"The degree of alignment to drive upstream growth between the Canadian federal and provincial governments has not been seen in more than a decade," Birn said. "The fresh focus on eliminating uncertainties to accelerate investment could set the stage for a return to new construction and greater growth."

Major hurdles remain. New oil sands projects are capital intensive, carry long lead times, and depend on project competitiveness and shareholder willingness to commit capital.

What is the watch item?

S&P Global flagged the final implementation agreement tied to the Canada-Alberta memorandum of understanding, expected Nov. 15, 2026, among the governments of Alberta and Canada and the oil sands industry. The firm called the agreement an important indicator for the longer-term outlook.

On upside potential, S&P Global estimates that previously proposed projects that did not advance could provide nearly 500,000 b/d of incremental production capacity beyond the current outlook.

"This estimate is what we expect would be the most attractive and expedient projects," said Celina Hwang, director of Canadian crude oil markets at S&P Global Energy. "Given the right conditions and time, the potential could be greater."