Oil production in Canada is expected to continue increasing through 2017 despite lower crude prices.

Canadian oil sands projects that were already under construction when prices started to fall in 2014 and those expected to begin production in the next two years will be the main drivers of growth, according to a new report.

The US Energy Information Administration (EIA) states production of petroleum and other liquids, which totalled 4.5 million barrels per day (b/d) last year, will rise to 4.6 million b/d this year and 4.8 million b/d in 2017.

“This increase is driven by growth in oil sands production of about 300,000 b/d by the end of 2017, which is partially offset by a decline in conventional oil production,” it adds.

Although a number of oil sands projects “may be operating at a loss” due to lower prices, they are designed to operate over a period of 30 to 40 years “and can withstand volatility in crude oil prices”.

In addition, the cost to shut down an existing oil sands project is estimated to be in the range of around $500 to $1 billion “which may exceed the operating losses a producer might experience in the short term”, the report states.

It adds: “EIA’s forecast for oil prices over the next two years is expected to allow new projects to earn a return over their running cost. Some producers may opt to decrease production volumes by delaying maintenance or allowing natural production declines.”

Last week the EIA also forecast oil production in the Gulf of Mexico to reach a record high in 2017.