Good morning. We would like to welcome everyone to the Canadian Natural Investment Presentation and 2021 Budget Conference Call. Presentation slides for this conference call are available to view with the webcast and in PDF format at www.cnrl.com. After the presentation, we will conduct a question and answer session. Instructions will be given at that time. Please note that this call is being recorded today, December 9th, 2020, at 9:00 A.M. Mountain Time. I would now like to turn the meeting over to your host for today's call, Corey Bieber, Executive Advisor. Please go ahead, Mr. Bieber.
Thank you, operator, and good morning, everyone, and welcome to Canadian Natural's Investor Presentation and 2021 Budget Conference Call. To facilitate today's call, you'll find a copy of our presentation slides on our website along with our announced 2021 budget. Before we kick off, I'd like to remind you of our forward-looking statements and our reporting disclosures. Of note in our reporting disclosures is that everything will be in CAD unless otherwise stated. As well, we report our reserves in production before royalties. I would also suggest that you review our comments on non-GAAP disclosures. The theme that you should come away with today is that Canadian Natural is a different kind of oil and gas company. Our asset base is unique amongst our peer group, underpinned by long life, low decline assets, and complemented by our conventional assets that allow significant flexibility.
All of the assets can generate very significant free cash flow. Beyond our robust asset base, there is a corporate strategy that focuses on generating real returns for shareholders, a driven management team, and a corporate culture that focuses on being effective and efficient. With all of the challenges that 2020 has brought, Canadian Natural has clearly demonstrated its robustness, sustainability, and the strength of its business plan. For 2021 and beyond, we will demonstrate why we are one of the few companies capable of delivering meaningful economic growth, increasing returns to shareholders, and reducing absolute debt, all in a responsible manner. While some of this morning's messages may be already familiar to you, today is a great opportunity to revisit the key attributes of the company to understand how we are different from our peers, different in terms of assets, management, culture, and alignment with shareholders.
For today's call, Tim McKay, our President, will first recap our commitment to ESG goals and then provide greater detail to the Canadian Natural advantage. Following Tim, Darren Fichter, our Chief Operating Officer for Conventional and Unconventional Operations, will provide a deeper dive into our natural gas, light, and heavy oil operations. He will discuss the depth opportunity, flexibility, and cash flow-generating capability of the assets. Scott Stauth, our Chief Operating Officer for Oil Sands, Thermal, and Mining Operations, will provide an operational and project update for each of these world-class assets. Mark Stainthorpe, our Chief Financial Officer, will then provide an update on our 2021 financial outlook as well as our strong financial position. Tim will then provide a summary prior to opening up for questions. With that, I'll hand it over to you, Tim.
Thank you, Corey. Good morning, everyone. Canadian Natural's business strategy is very strong. We have great assets, capital discipline, operating excellence, and the ability to strengthen our balance sheet and deliver returns to shareholders. These same strengths are applied to environmental, social, and governance side of the business, ESG, where we are delivering industry-leading performance across the board, a significant factor in our long-term sustainability. Canadian Natural takes a long-term view of ESG aimed at creating long-term value, ensuring we identify, assess, quantify, adapt, align ourselves, and then execute. We are developing plans to address these risks by applying technology, innovation, so we can continuously improve our performance in the near, mid, and long term, always ensuring it is adding long-term value. Moving to slide six.
If you look at overall ESG performance in terms of investment priority, it is clear that Canada is a world leader and scores the highest in every category and should be an investment priority. Slide seven. Canadian Natural is delivering leading ESG performance. Our long life, low decline assets are advantaged as we can leverage technology, innovation, and continuous improvement to deliver ever-improving environmental performance with a pathway to attaining net zero in oil sands. It's clear that Canadian oil and gas on the global market reduces global GHG emissions. As a result, Canadian Natural should be an ESG priority. Next slide. Canada's oil and gas recognize the need to reduce GHG emissions, and we've been able to leverage technology and Canadian ingenuity to deliver impressive results.
Canadian Natural has invested approximately CAD 3.7 billion in R&D since 2009, using this investment to reduce our environmental footprint, unlock reserves, drive ever more effective and efficient operations, investing now to even do better in the future. Slide nine, for example, methane. We've reduced our absolute vent volumes by 15% since 2016. Despite the COVID challenges in 2020, we've had a very active program. As we target to complete our corporate fugitive emissions inventory, identifying areas where we can further reduce methane. Part of our program for the last two years, we have changed out over 5,000 high bleed pneumatic pumps across our operations, a reduction equivalent to 500,000 tons of CO2 per year. As well, we continue to develop and pilot technologies to help us understand areas we can do even better, delivering greater reductions of methane. Next slide.
On a corporate basis since 2012, we continued to drive our GHG intensity down an impressive 30%, equivalent to removing 1.9 million cars off the road annually. In a recent report, slide 11, a third party reviewed oil sands emissions and determined that for Scope one emissions, Canadian Natural was 35% lower than the peer average. A good interim result for our company. We know we have to continue to drive our CO2 intensity down. Slide 12. Canadian Natural is using state-of-the-art carbon reduction technology and is a leader in carbon capture and sequestration in the oil and gas industry in the world. We have three major facilities capturing approximately 2.7 million tons of CO2 per year, equivalent to taking 576,000 cars off the road annually. Next slide.
Getting to net zero takes the ability to leverage technology, be innovative, and using Canadian ingenuity, as well as having defined actions in the near, mid, and long term. Canadian Natural has a huge technology funnel with a few of these activities listed here as we progress on our journey to net zero. I will now talk to social responsibility. Slide 14. Investing in indigenous communities is important to Canada, and at Canadian Natural, we are working together with communities to help develop their companies, their people, by providing training, business, and job opportunities. Most importantly, we are taking the time to understand and respect the community's perspective and goals. We work together with more than 150 indigenous companies, and in 2019, we did approximately CAD 550 million of business, and over the last three years, CAD 1.4 billion, making a significant difference in their communities. Slide 15.
Safety is a core value at Canadian Natural. It is in every aspect of our business as we target no safety incidents and no harm to people. Canadian Natural is delivering industry-leading performance with our overall TRIF down 20% versus 2018, a 30% reduction for our contractors, and we are committed to deliver ever-better performance each and every year. For governance, slide 16, Canadian Natural has a strong and effective model. Our board, as well as our board HSE governance and risk committees review and hold management accountable to identify and mitigate risks. The management committee works with various subcommittees to identify and develop strategy and plans to address risks, then effectively execute those plans, delivering performance aligned with our shareholders. I will now talk to Canadian Natural's advantage. Slide 18.
First, Canadian Natural has a proven, effective strategy, and as a result, we are delivering in today's environment and will continue into the future. Canadian Natural strategy includes flexible and effective capital allocation and our ability to be nimble to capture opportunities. Our strategy is simply to optimize capital allocation to maximize value for our shareholders while ensuring we are maintaining a strong balance sheet. We have a history of capital discipline, operational excellence, and we have robust economic long-life low-decline assets, and relevant to most of our peers, the ability to enhance our margins and grow production, which results in more long-term value for our shareholders. We have defined growth and value enhancement plans for every product and basin we operate in. This is driven by our effective and efficient operations, our area knowledge, ownership, and operatorship of infrastructure. Opportunistic acquisitions have always been a part of our strategy.
We have no gaps in our portfolio, and acquisitions need to make sense and add long-term value. Effective and efficient operations, our culture of leveraging technology innovation, driving continuous improvement throughout the company gives us ever-improving operations. It is for these reasons Canadian Natural has a leading free cash flow profile. I'll now review some of the many advantages we have, starting with our long-life, low-decline assets. For example, slide 20, our oil sands mining when compared to a typical unconventional well. First, the oil sands mining has no production decline, no reservoir or reserve replacement risk, and to hold production for 30 years at 450,000 bbl/d would be approximately CAD 25 billion less to maintain production when compared to an unconventional shale player. The number of wells required to match our long-life, no decline oil sands production of 450,000 bbl/d is substantial.
Approximately 8,000 wells, and has more geological and execution risk. Next slide. In a year of low prices, due to the short reserve life, unconventional producers will sell a substantial portion of the reserves at low prices. Unlike the oil sands, a small percentage of long-life reserves are produced in low-price years. For Canadian Natural, reducing both conventional and unconventional drilling during low-price period has little impact on the company's production. Finally, volatile pricings have little impact on our NPV, as we have low operating costs and maintenance capital, large reserves, making our free cash flow robust and sustainable. Slide 22. Canadian Natural's 1P reserves are the highest among our peers, showing the strength and depth of our assets, with over 27-year reserve life index, of which approximately 84% represents long life, low decline reserves that have lower execution risk.
Oil sands mining reserve index is an impressive 40-plus years. Moving to the next slide. Not only does Canadian Natural have the largest proven developed producing reserve base when compared to our peers, our low-cost structure, effective, efficient operations make our PDP reserves robust, giving us the highest value among peers. Of those reserves, a significant portion is long life, no decline SCO reserves, which has no differential risk. Another advantage is our diversified product mix. Slide 25. Canadian Natural has a balanced and diverse product mix with approximately 48% that is high value, light crude oil, SCO, and NGL on a BOE basis, limiting our exposure to one product. Our liquids production, approximately 81%, is from long life, low decline assets, which is sustainable through volatile prices, as they require less maintenance capital.
As well, we have approximately 1.6 BCF of natural gas production, or 22% of our BOEs, which is well-positioned to capture additional value should natural gas prices strengthen. Flexible allocation, effective and efficient operations. Slide 27. Canadian Natural has a long history of capital discipline, and as many have seen this before, we accomplish this by strategically allocating cash flow to our four pillars to maximize shareholder value. Maintaining balance sheet strength, ensuring we have a sustainable and growing dividend, disciplined resource development, and opportunistic acquisitions only if they add long-term value. Next slide. Our area knowledge, extensive operated and owned infrastructure, and teams that are driven to deliver top-tier, effective, efficient operations gives us margin growth opportunity. They're focused on production optimization, technology, and innovation, as well as using economies of scale to deliver margin enhancement across our operations. Slide 29.
Another advantage is our low maintenance capital. Slide 30. As a result of a unique asset base, Canadian Natural corporate decline is low at approximately 10%, with approximately 63% of our production being long life, low decline or zero decline production, requiring much less maintenance capital to maintain production. Next slide. As a result of our low maintenance capital, effective and efficient operations, our long life, low decline assets provide production that is more sustainable, as shown in this table, Q1 to Q4 of 2020 versus our peers. Leading free cash flow. For all these reasons, Canadian Natural delivers. Slide 33. Based on analyst forecasts, Canadian Natural is top tier and is well-positioned above our peers in generating free cash flow, even in a volatile year such as 2020. Next slide.
The resilience of our assets is shown here when comparing 2020 forecasted free cash flow yield from two different time frames based on analyst forecasts. As you can see, we generate significantly more free cash flow than our peers as a result of our long life, low decline production, effective and efficient operations, and being disciplined with our capital. Next slide. In 2021, once again, based on analyst forecasts, our free cash flow potential is 45% greater than the peer average. Again, an indicator of the strength of the company's operations, assets, and capital discipline. Next slide. Long life, low decline asset base, low and flexible capital allocation, effective and efficient operations results in Canadian Natural's industry-leading sustainable dividend, which is robust even through volatile prices. While some companies could not manage through the cycle, we maintained our dividend increase.
In summary, slide 37, Canadian Natural's ability to deliver free cash flow in today's environment starts with a large, long life, low decline asset base of approximately 765,000 bbl/d , which has low maintenance capital requirements and is sustainable, allowing us to withstand commodity price changes. Our diversified products and assets are driven by effective and efficient operations, area knowledge, ownership, and operatorship of infrastructure. We have 1.6 BCF of natural gas, and with our diverse assets, ability to add low-cost production. Next slide. Our culture of continuous improvement is unique among our peers, as the teams are focused on delivering margin growth across our asset base over and above what we see today. We have flexible, effective capital allocation and our ability to be nimble to capture opportunities. Our strategy is simply to optimize capital allocation to maximize value for our shareholders.
As a result of our effective, efficient operations, our quality of our assets, we have a low free cash break even, including all capital expenditures plus current dividends, of approximately $30 - $31 per barrel. Thank you. Darren will now talk to our conventional unconventional assets.
Thank you, Tim. Good morning. As Tim mentioned, I'll provide an overview of Canadian Natural's high-quality conventional and unconventional assets. One of Canadian Natural's greatest strengths is our large and diverse portfolio of assets that deliver significant free cash flow. These assets provide exposure to proven and emerging plays and are a balance of low capital exposure and long life, low decline assets. Starting with an overview of Canadian Natural's natural gas, light oil, and NGL portfolio. Slide 42. Canadian Natural has significant natural gas, light oil, and NGL production in Canada. Q4 2020 natural gas production is targeting over 1.6 Bcf per day with proved plus probable reserves of 15.8 Tcf, including the recently acquired Townsend assets. Light oil and NGL production is significant at approximately 80,000 bbl/d in Q3, with proved plus probable reserves of 716 MMbbl .
Our international assets provide exposure to Brent pricing, has Q3 production of 39,000 bbl/d of light oil and 289 MMbbl of proved plus probable reserves. Canadian Natural's liquids rich natural gas and light oil assets provide exposure to high-quality new and established plays that have stable production and strong cash flow, delivering targeted 2021 operating free cash flow of approximately CAD 700 million. Slide 43. One key area of our asset base is the Montney, a top-tier liquids rich natural gas and light oil play. Canadian Natural is one of the largest Montney landholders in Canada at 1.2 million net acres with approximately 2,100 defined locations. The Greater Wembley, Septimus, and recently acquired Townsend assets are key focus areas for 2021 and beyond. I will highlight them on the next few slides. Slide 44.
The BC Montney includes Townsend and Septimus areas, both of which are significant components in Canadian Natural's defined plan. Townsend is targeting Q4 2020 production of 240 million cubic feet per day of natural gas and 5,000 bbl/d of liquids. The area has significant available processing capacity for future development. We are targeting to drill 35 wells before year-end 2021 at a strong 12-month average capital efficiency of CAD 5,500 per BOE, resulting in approximately 100 million cubic feet per day of growth by Q4 2021. When combined with our top-tier operating cost of CAD 0.28 per Mcfe, we are unlocking significant value from our asset at Septimus.
The combination of our high-quality land base, approximately 1,000 defined locations, disciplined and flexible development strategy, and focus on technology innovation and continuous improvement allows Canadian Natural to maximize the value of these assets. Slide 45. One example of Canadian Natural's focus on continuous improvement and sustainably lowering costs is our drilling and completion performance for the BC Montney. We have delivered a 28% reduction in drilling costs and a 34% reduction in completion costs since 2017. Canadian Natural is focused on cost efficiencies, and through leveraging technology, innovation, and continuous improvement, I fully expect costs to be driven down even further. Slide 46. Another one of our key Montney assets is Greater Wembley, where we have 153 net sections of concentrated, de-risked, undeveloped Montney land with a potential for 495 defined liquids rich locations and an additional 190 in emerging Montney layers. Now focusing on the Wembley development.
In 2021, we are targeting 18 wells and construction of an oil battery that will be on stream October 2021, adding over 7,000 bbl/d of high value, low cost light oil production. The concentrated land base, disciplined and flexible development plan, combined with our continuous improvement culture, unlock significant value from these assets. Slide 47. Canadian Natural's controlled infrastructure is strategic, and as you can see from the map, our owned and controlled facilities overlap our high-quality lands. We have significant available plant capacity, which facilitates low cost drill to fill developments and also allows us to leverage the infrastructure for utilization of technology like LEGS to maximize the value of our assets. Slide 48. Canadian Natural is developing game-changing technology.
Liquids enhancement and gas storage has the potential to unlock significant value by increasing liquids recovery by greater than 50% and providing flexibility to optimize commodity price cycles. The results of the Septimus LEGS pilot are very encouraging, and as a result, we are progressing the regulatory approvals for two additional LEGS pilots in the Greater Wembley area. LEGS has the potential to significantly increase the value of our large liquids rich land base. Slide 49. Canadian Natural's vast, diverse, balanced asset base, significant controlled infrastructure, effective and efficient operations, and our ability to leverage technology unlock significant value. Our large inventory of defined locations, combined with our disciplined and flexible capital allocation, ensures capital is allocated to the highest return projects to maximize value. I will now provide an overview of our heavy oil assets. Slide 51.
Canadian Natural is the largest primary heavy oil producer in Canada, with Q3 production of 71,000 bbl/d . At our long life, low decline Pelican Lake heavy oil property, Q3 production was 56,000 bbl/d . Total combined proved plus probable reserves are 718 MMbbl . Canadian Natural's heavy oil assets provide a balance between low capital exposure, primary heavy oil, and long life, low decline Pelican Lake production, generating significant free cash flow, targeting approximately CAD 400 million of 2021 operating free cash flow. Slide 52. Our primary heavy oil assets provide significant value to shareholders through efficient, repeatable drilling programs. While CHOPS wells remain a significant part of our defined inventory of locations, the utilization of technology has unlocked areas that were previously not economic with vertical wells.
Horizontal multilateral and fishbone wells have significantly improved productivity and recovery and now represent approximately half of our defined heavy oil locations. This is a clear example where technology development has created significant value. Slide 53. A key component of our long life, low decline assets is our world-class polymer flood at Pelican Lake. The Pelican Lake project is another good example of where our utilization of technology is driving significant value. We have recovered approximately 12% of the oil in place in the developed portion of the pool, and polymer flooding increases the recovery factor up to 28%. Additionally, Pelican Lake long life, low decline reserves have high value due to low operating costs. Slide 54. Pelican Lake operating costs have been driven down by 29% since 2014 through effective and efficient operations, supported by economies of scale.
The savings achieved to date equates to an improvement of approximately CAD 50 million of 2020 annual operating costs. Slide 55. Heavy oil provides a balance of low capital exposure and long life, low decline assets. Primary heavy oil assets provide access to proven and emerging plays through a large defined inventory of repeatable low-cost drilling. Long life, low decline assets like Pelican Lake have low reserve replacement costs and are more tolerant to commodity price volatility due to low declines and low operating costs. Our extensive asset base, significant owned and controlled infrastructure, effective and efficient operations, and ability to leverage technology, combined with flexible and disciplined capital allocation ensures the highest return projects are executed. We will continue to leverage our expertise, economies of scale, and technology to maximize the value of these assets, driving higher return on capital and delivering significant free cash flow.
I will now hand over to Scott for oil sands.
Thank you, Darren. Good morning. Today, I am going to talk about our world-class thermal and mining oil sands assets. First, we will go through our thermal in-situ assets. Slide 58. Canadian Natural's thermal assets are vast, with over 4.1 Bbbl of 2P reserves and production of approximately 288,000 bbl/d in Q3, with an excellent operating cost of CAD 7.85 per barrel. Our largest producing assets, Primrose, Jackfish, and Kirby, have a total facility capacity of 340,000 bbl/d . We have significant opportunity to utilize available facility capacity at low cost. We are a top-tier, effective, and efficient thermal in-situ operator with over 25 years of experience focusing on enhancing our margin utilizing CSS, SAGD, and steam flood. Our depth and expertise, combined with large land holdings and technology enhancements such as solvents, allows Canadian Natural the ability to capture significant value. Next slide.
One of our strengths is our significant infrastructure. An example of that is our Primrose and Wolf Lake area, with over 140,000 bbl/d of facility capacity and more than 60,000 bbl/d on an annualized basis of capacity available for development opportunities. Our capital efficiency is excellent in Primrose at approximately CAD 10,000 per barrel, with average production rates of 400 bbl/d per well. We have approximately 2,000 locations identified economical at $45 U.S. WTI. As a follow-up to CSS, our steam flood operations have been very successful, and we forecast approximately 20% increase in recovery over CSS using steam flood. It comes with very little cost because we use the existing CSS horizontal wells.
Taking learnings from Kirby's cell solvent pilot, we are planning a second pilot, this time on steam flood in Primrose in the second half of 2021. We have significant opportunities at Primrose and Wolf Lake, and we will continue to focus on ways to leverage our infrastructure to add low cost, low decline production. Next slide. Our SAGD operations in Kirby and Jackfish are another great example of how we add significant value through economies of scale. We have five 100% owned processing facilities, each of which have the capacity of approximately 40,000 bbl/d . With more than 35,000 bbl/d on annualized available capacity, our SAGD assets are another great example of our strong infrastructure capabilities. We continue to optimize Kirby North production with rates over 42,000 bbl/d , with additional inventory ready to continue the facility at capacity.
In Jackfish, we are also optimizing an inventory of approximately 21,000 bbl/d that were previously curtailed. We have significant and economical pad add opportunities with efficiencies of CAD 8,000 per barrel, which is a further reduction of 6% in cost that will allow us to utilize the facility capacities for many years into the future and help drive lower operating costs across the SAGD production. Slide 61. Technology and innovation play a huge role on increasing the value of our assets and reducing our greenhouse gas emissions intensity. As mentioned, we are planning a solvent pilot in Primrose in the second half of 2021, and with that, targeting a 50% reduction in SOR improvement and a 50% reduction in greenhouse gas intensity.
In addition, we target it will reduce our operating cost by approximately CAD 1 per barrel and significantly increase our potential production capability by freeing up steam capacity. The application of solvent in steam flood has significant potential in the Primrose asset base. We continue to evaluate additional emerging technologies for more improvements and efficiencies. Next slide. Canadian Natural has a competitive advantage with our large, long life, low decline assets. Our large reserves, significant owned and operated infrastructure, allow us to capture opportunities and fill unutilized capacity at low capital efficiencies. We have advancements in solvent technology that could effectively improve our SORs and greenhouse gas intensities. It will also create efficiencies in our operating cost, energy, and water use. Solvent application has the potential to effectively double thermal production.
We have the right culture and expertise to leverage our assets, utilizing technologies combined with Canadian Natural's continuous improvement process to enhance value and optimize our cost. We are targeting a strong CAD 1.1 billion in operating free cash flow in 2021. Canadian Natural is a very unique and robust thermal oil sands producer delivering top-tier results. Switching to our mining assets. Slide 64. Our oil sands mining assets are industry-leading with over 475,000 bbl/d net of capacity and contain 6.9 Bbbl of proved plus probable SCO reserves, making this a world-class operation with 17.5 Bbbl of oil in place. Our top-tier operating costs capture significant value with high-quality SCO barrels that are upgraded with no decline and no reserve risk.
We have the advantages of economies of scale with our three mine operations, and our teams are focused on improving the cost structure, increasing the reliability, optimizing production through continuous improvement culture, and strong focus on safety performance. Next slide. Canadian Natural clearly leads the industry in utilization. This is a key factor for our operations group, with safety and reliability at the forefront. Our teams are clearly focused on delivering high utilization through effective and efficient operations. We target to maximize the capacity of all the assets from the mine operations through to the upgraders. The chart indicates this is one of our significant strengths and competitive advantages, as our high utilization means incremental barrels are processed at very low incremental cost. Next slide. Our culture of continuous improvement is relentless.
This shows a massive incremental cash flow of CAD 3.5 billion in 2020, resulting from approximately CAD 23 per barrel op cost reduction since 2013. To get there, we focused on efficiencies like mine equipment availability and high utilization, as an example. We continue to reduce our maintenance cost without compromising reliability, and we put a laser-sharp focus on continuous improvement projects done the Canadian Natural way to become more effective and more efficient. Slide 67. We are targeting midterm volume enhancement opportunities in the range of 35,000 bbl/d-45,000 bbl/d of upgraded SCO at our Horizon upgrader on reliability and productive capacity increase projects, as well as targeting a reduction in operating cost of CAD 1-CAD 2 per barrel. Currently, we are performing engineering work on the vacuum unit and field execution of additional tank installations as part of the first stage of reliability improvements.
We are also focusing on engineering and upgrades needed to extend our turnaround intervals from yearly to every two years, adding to our already top-tier utilization. We are working to be in a position to move forward with execution of capacity increases in stages if we choose to do so in order to obtain optimal cost control. Next slide. Our In-Pit Extraction Process, or IPEP, is a potential game changer for oil sands mining. We believe this opportunity has three very significant advantages. First, it reduces our overall mining operating costs by CAD 2-CAD 3 per barrel. Second, it reduces our greenhouse gas emissions significantly with less haul trucks. Third, it eliminates the need for tailings ponds and thereby significantly reducing long-term reclamation costs.
While it is unfortunate we had to shorten our 500 ton per hour IPEP pilot plant testing due to COVID-19, overall, we are satisfied with the majority of the results. However, we have more work to do to ensure we get it right. We are targeting to finalize our strategy by the end of 2021 and plan for the next stage, which could involve engineering of a commercialized size plant of 700 tons per hour with modifications learned from our pilot. Our goal is to quantify the capital cost and economics of a commercial plant as we look to maximize the value opportunity. Slide 69. We are in a strong position with our long life, no decline assets with midterm growth potential. We are focused on reliability capacity increases as well as mining and extraction process improvements like IPEP.
We will continue to focus on becoming more effective and efficient to drive improvements and increase cash flow. We have the economies of scale in our three oil sands mines with a very high degree of expertise to focus on improvements and growth opportunities using technology and innovation. With our low operating cost and efficiencies, Canadian Natural is targeting to deliver a massive CAD 3.7 billion in operating free cash flow from oil sands mining operations in 2021. With that, I will turn it over to Mark.
Thanks, Scott. This morning I'll provide some details on our 2021 budget, and I'll review Canadian Natural's strong financial position. First, I'll provide some details on the 2021 budget. Starting on Slide 72. At Canadian Natural, we have a long history of successfully balancing our four pillars of capital allocation with a focus on maximizing shareholder value. Our four pillars are balance sheet strength, returns to shareholders, resource value growth, and opportunistic acquisitions. Our ability to generate significant and sustainable free cash flow facilitates a strengthening balance sheet and sustainable returns to shareholders. We are prudent and disciplined in our allocation to resource development while maintaining flexibility to adjust when necessary. We have a strong track record of effective and efficient operations that drive better return on capital. Finally, opportunistic acquisitions have always been a part of our strategy.
However, we have no gaps in our portfolio, and as a result, any acquisition must add value to shareholders. The balancing of these four pillars with a focus on value creation maximizes long-term shareholder value. Our priorities in 2021 reflect continued balance between the four pillars, as seen on Slide 73. We have a disciplined capital budget of approximately CAD 3.2 billion, with the allocation going to projects providing the highest return on capital. This includes the progression of projects that add value and production in 2021 and in future years. This capital budget provides for significant free cash flow, allowing for further strengthening of our balance sheet and continued sustainable returns to shareholders. We target to continue to improve our effective and efficient operations in 2021 and maintain the majority of cost efficiencies achieved in 2020, therefore maximizing economic returns and free cash flow.
We maintain flexibility within the capital budget and can adjust if necessary, including growth capital of approximately CAD 200 million included within the 2021 budget. Our execution priorities in 2021 are consistent with how Canadian Natural drives long-term shareholder value. On Slide 74, our 2021 capital budget of CAD 3.2 billion is targeted to deliver 5% year-over-year BOE production growth. The strong production increase is a result of our low corporate decline rate, effective and efficient operations, and a modest but increased drilling program as a result of no curtailment and a current improved outlook for commodity prices in 2021. These production targets also reflect all required planned maintenance activities throughout the year and a full year production related to acquisitions in 2020.
Few E&P companies, if any, have the ability to deliver 5% BOE production growth while maintaining significant free cash flow generation, giving Canadian Natural the opportunity for increasing sustainable returns to shareholders and absolute debt reductions. Slide 75. Canadian Natural's conventional and unconventional assets, including our international operations, deliver significant operating free cash flow, as shown in this slide, a result of effective and efficient operations in these areas. Slide 76. Operating free cash flow from our thermal assets is growing, and a continued focus on optimization of our vast assets in this area provides sustainability to the overall business model. Slide 77.
Our oil sands mining and upgrading operating free cash flow is substantial, with the graph demonstrating the consistency of the asset's ability to generate safe and reliable operating free cash flow. On slide 78, you can see that the impact of long life, low decline projects is substantial and should not be underestimated, with our overall corporate decline rates at approximately 10%. As a result, our capital required to keep production flat is significantly less than the typical E&P company, allowing Canadian Natural to generate significant and sustainable corporate free cash flow. Of note, our size and scale provides significant advantages as well as significant torque to increases in commodity prices. Our diverse asset base and leading free cash flow generation provides significant upside for shareholders. As shown in slide 80, we have a strong track record of delivering increasing returns to shareholders.
Canadian Natural has returned approximately CAD 7.8 billion to shareholders over the last three years, with CAD 5.3 billion in dividends and CAD 2.5 billion in share repurchases. This equates to Canadian Natural returning over 21% of its current market capitalization to shareholders. During this time frame, our production has also grown by 200,000 BOE/d or 21%. This very clearly demonstrates our unique ability to both economically grow the business and our strong commitment to returning cash to shareholders. Our dividend growth and consistency is unique, as you can see in the chart on slide 81. Only nine out of the TSX 60 companies across all sectors in Canada have increased their dividend for 20 or more years. Of those that have, Canadian Natural is leading with a 20% CAGR over that time period.
This, again, is a reflection of the uniqueness of our low decline, low maintenance capital asset portfolio that delivers significant and sustainable free cash flow. Going a step further on slide 82 and comparing the dividend growth to oil and natural gas super majors, our record is impressive. Only two of the six super majors have a similar dividend growth history of 20 or more years. Turning to slide 83, we target sustainable dividend growth through the cycle. We are advantaged by our long life, low decline production base, effective and efficient operations, and low cost structure that provides low breakeven costs and sustainability through the cycle. This chart demonstrates the history of growing returns to shareholders through the dividend, with 20 consecutive years of dividend increases, representing a 20% CAGR over that time period. Slide 84.
I believe that one of the key reasons Canadian Natural has delivered these kinds of results is that management and directors have more invested wealth at stake than any of our peers, and by a wide margin. We have clear alignment with our investors and a strong motivation to create long-term sustainable value. I'll now take a few minutes to discuss the strength of our financial position, starting on slide 86. Our financing strategy includes maintaining a balance sheet strength while maximizing financial flexibility. We target strong investment-grade credit ratings, which facilitate access to capital markets. Balance sheet strength is core to Canadian Natural. Our balance sheet is strong today, and we will continue to focus on our financial position as we progress through the commodity price cycle. We also maintain a flexible capital structure with a focus on managing maturities.
As part of our robust financial position, we maintain ample liquidity to support delivering on our financial plan. Total liquidity at Q3 2020 was strong at about CAD 4.2 billion, including cash and short-term investments. Subsequent to Q3 2020, we issued CAD 800 million in Canadian medium-term notes at attractive rates, further enhancing our liquidity position. Moving to slide 87. We have a strong and very supportive banking group comprised of world-class Canadian, U.S., Asian, and European financial institutions. We extended to 2022 and upsized by CAD 250 million, a term loan facility in 2020, providing additional liquidity and demonstrating the strong support from our banking group. Moving to slide 88. As we have noted, our low decline, low maintenance costs, and free cash flow provide support to our financial position. In 2021, our balance sheet has the opportunity to delever very quickly with absolute debt repayments.
In summary, on slide 89, our strong financial position affords us the flexibility to manage through changing market conditions and capture value-adding opportunities. In 2021, we target to generate significant free cash flow that will further strengthen our balance sheet and provide sustainable returns to shareholders. With that, I'll turn it back to Tim for some closing comments.
Thank you, Mark. In summary, as you've seen this morning, Canadian Natural has many competitive advantage compared to our peers, and we are delivering top-tier results and built to capture value through all the cycles. Moving to slide 91. We are more aligned with shareholders than our peers, with the key goal of balancing four pillars to maximize shareholder value. In 2021, we'll continue to strengthen our balance sheet by being disciplined with our capital. We have a sustainable dividend, and we have grown the dividend for 20 consecutive years, a track record we are very proud of as a company. For resource development, we'll continue to allocate capital in a disciplined manner across our diverse, balanced asset base to both short-term and midterm opportunities to grow our production. Opportunistic acquisitions have always been a part of our strategy, and we're very good at it.
That being said, we have no gaps in our portfolio, as a result, any acquisition has to make sense and add value for our shareholders. Slide 92. Canadian Natural's ability to deliver significant free cash flow is driven by our effective and efficient operations. A high-quality, long-life, low-decline asset that has low maintenance capital and significant reserves that can deliver long-term economic growth. A culture of continuous improvement is unique among our peers, as our teams are focused on delivering operational excellence across our asset base. We continue to leverage technology, innovation, and economies of scale to ensure we maintain our operational savings. In 2021 and beyond, we see more opportunities to further enhance our effective and efficient operations. As WTI prices improve, there's even more upside for our shareholders. Next slide.
Canadian Natural has a proven effective strategy, and we are delivering in today's environment, and will continue into the future. We have near and midterm inventory of economic growth projects in our conventional, unconventional assets, thermal pad adds that can leverage off existing facilities, as well as enhancements in our oil sands mining and upgrading segments. At the midpoint, equaling approximately 265,000 BOEs per day of growth potential, giving Canadian Natural significant optionality for the future. Next slide. In 2021, as market conditions change, we will react, ensuring that we are disciplined with capital, ensuring we are adding long-term value for our shareholders. We're targeting a capital budget of approximately CAD 3.2 billion, of which CAD 200 million is for growth projects, targeting to deliver approximately 5% growth. Canadian Natural is unique, robust, and consistently delivers top-tier free cash flow.
For 2021, based on $45 U.S. WTI, we're targeting CAD 2 billion-2.5 billion of free cash flow after dividends. Few, if any, of our peers can show economic growth, have sustainable growing dividend of 20 years, and show debt reduction. Canadian Natural is robust through all the cycles. That concludes our presentation. I will now open up the call to questions.
At this time, if you would like to ask a question, please press star, then the number one on your telephone keypad. We'll pause for a moment to compile the Q&A roster. Your first question comes from Greg Pardy with RBC Capital Markets. Please go ahead.
Thanks. Yeah, thank you. Thanks for the presentation, all. A couple of questions for you, and you've kind of answered it, but as you look into 2021, is there anything that would cause you to tilt the balance amongst dividend growth buybacks and just strengthening the balance sheet?
Hey, Greg, it's Mark. As you saw in the presentation, we do have a long track record of dividend increases. We're proud of that track record. Any dividend increase, of course, must be sustainable through cycles. I think this key point of sustainability was pretty evident in 2020, where we were able to sustain the March increase and maintain a solid financial position with our strong investment-grade credit ratings and, of course, ample liquidity. Any dividend increase is, of course, a board decision. With the significant free cash flow driven by our low corporate decline and effective and efficient operations, I think that opportunity is there going forward. We'll progress that as we go through 2021.
Yeah, I can hear the models changing now. The second thing is, you've mentioned this during the mining oil sands moving from a year to a two-year major turnarounds. I'm just curious as to when something like that might become implemented. Does it mean that there wouldn't even be short, week turnarounds over the course of the year? How should we think about that?
Sure, Greg. What I'll do is I'll turn it over to Scotford to give a little more color to that turnaround plan.
Hi, Greg. Yes, in terms of the two-year turnarounds, what we're looking at for that opportunity and timing would be, you could look for sometime in 2024 for that to evolve. You'd still see basically minimal maintenance happen throughout the year, but the large turnarounds would be going to every two years thereafter that. That's the approximate timing.
Okay. Terrific. Just the last one from me, if you'll oblige me, is have you got the one pager going up on guidance? If not, could you maybe just give us what you're using in terms of spreads and just an FX rate underlying your free cash flow assumptions?
Yeah, sure. There is an advisory at the back of the slide deck on the PDF on the website, Greg, but we're using, call it the 45 WTI 250 AECO. We have about a 28.5% diff over the year. That equates to just under CAD 13.
Okay, Mark. What about FX?
FX at 130.
Okay, thanks very much.
Thanks, Greg.
Your next question comes from Neil Mehta with Goldman Sachs. Please go ahead.
Hey, can you hear me guys? Thanks for doing the presentation here. The kickoff question I had is a follow-up to Greg's on de-leveraging. You've come out with a CAD 15 billion net debt target, absolute target in the past. Is that still the target that you guys are aiming for? As you see it, when do you think that would be most achievable?
Thanks, Neil. It's Mark. You'll recall that that target was part of a free cash flow allocation strategy we had, where we had the free cash flow after capital and dividends going 50% to the balance sheet and 50% to buybacks. Of course, right now we have no buyback program, so by default, free cash flow is targeted in the near term to be allocated to debt repayment.
I think as you've seen that cash flow or free cash flow is significant in 2021 in this pricing environment. The board will obviously revisit all those things as we go through the year. As I said, in the near term, we are targeting the balance sheet with that free cash flow. We're driving that debt down. I think that's a good target, and we'll continue to drive there as we go through. Commodity prices change as we go through, but we'll continue to drive debt down as we continue here in 2021.
Yeah. The follow-up is slide 78. We've got our rulers out here, can you just give us a CAD sensitivity here in CAD millions for every CAD change in crude in Canadian dollars? Every U.S. dollar change in crude.
Sure.
Your cash flow in Canadian dollars?
Yeah. Sure, Neil. It's Mark again. Based on these assumptions and parameters, around CAD 330 million of annual Canadian cash flow for every CAD 1 WTI change. Of course, you have to make sure that you're adjusting your assumptions correctly with FX and things like that. On these assumptions, that's how it goes around.
Yep. That makes sense to us. Thanks.
Thanks, Neil.
Your next question comes from Menno Hulshof with TD Securities. Please go ahead.
Good morning, everybody else. I'll start with a question on your WTI breakeven guidance for 2021. It was good to see that that's unchanged at CAD 30-CAD 31 per barrel. My question is, do you foresee that being sustainable into 2022, or is maintenance capital being held back to achieve that?
No. Obviously, we've got the CAD 3 billion of maintenance capital this year, and CAD 200 of it is allocated to growth. No, it would change depending on what kind of products that we decide to go with. In Darren's presentation, you can see there's a pretty broad range of products. If we maintain, let's say, natural gas production, where there's some very low, very good CAD per BOE/d, around CAD 5,000, CAD 5,500. Towards the upper end, you have the light oil that's closer to CAD 10,000 of BOE/d. From each year, depending on what activities, where we want to grow our production. Obviously, if crude prices are stronger, we'd be weighted more towards the oil side. If gas prices are stronger, we could be more weighted to the gas side.
A lot of it depends on your outlook of the product pricing and what activities we have in there. The other piece that's ahead of us is also in the oil sands mining. There are various years where there is more demand on capital versus other years. This next year, Scotford, I believe we have one turnaround at Horizon scheduled and no turnarounds at Scotford for this upcoming year.
Perfect. Thanks, Tim. I'll just follow up with a question on LNG. I've asked this question before, but maybe the message has changed a little bit. Are you seeing opportunities to get more involved? If so, would you be willing to comment on what you would or wouldn't consider in terms of structures like supply agreements? Is the thought process more likely that your gas business simply benefits on any pricing uplift in the coming years?
Yeah. We really have not been looking at the LNG space here for a number of years. We looked at it, I believe it was about two years ago. We really just have no real interest in the LNG piece today.
Perfect. Thank you.
Thank you.
Your next question comes from Phil Gresh with JPMorgan. Please go ahead.
Yes. Hi. Good morning, and thanks for taking my question. First question is just as we think about the oil price sensitivity question, and if there's an upside scenario for every CAD 5, you're talking about over CAD 1.5 billion of additional cash flow. How do you think about the priority of taking something like that and putting it more towards the balance sheet, even more than what you're planning for this year, versus incrementally targeting a little bit more of growth, maybe shorter cycle growth? Secondarily, what would it take to consider a bigger project like the Horizon project?
Yeah. Phil, it's Tim here. I'll maybe start it off, and then Mark can finish it off here. I think we're very comfortable where we are in terms of our budget. There's still egress. Hopefully here by Q3, we'll see some freeing up on some egress, and then by Q4 2022, we see the Trans Mountain. I think right now we're very happy where we are. I would suspect that we'd be more likely and highly likely, I would say, to deleverage. Mark, I don't know if you have a?
Yeah, no, nothing really further to comment on there. Yeah, I think that as we saw in the slides, there is a lot of torque to the upside given our size and scale. As you get incremental pricing increases, that'll give us an opportunity to delever even more quickly and provide just more of that significant, sustainable free cash flow.
Got it. Okay. Just on the second part of the question there, I guess, is there a way you're thinking about this SCO opportunity giving into a bit more chunky spending? Is there a longer-term price that you'd be more comfortable with a bigger amount of growth capital?
Yeah. With the Horizon opportunity there, we're still going through the engineering and that. Scotford, you can maybe talk to maybe a little bit more on that piece, but I think right now we just are doing our work.
Yeah, I think so. I agree, Tim. We want to step through, make sure that we get it right, make sure that we don't overlook any opportunity that's there, ensure we get a good handle on the capital piece of it. We have the ability to take these opportunities in smaller segments, spend the capital over the right amount of time to ensure that we can properly control the cost. That's how our view of it would be. It would be we do these in stages over time.
Got it. Just with all the cost reductions you've seen this year, how do you think about the sustainability of those cost reductions? How much was temporary and might come back in 2021 if prices are higher versus kind of more permanent actions for the operating costs that you've talked about?
I feel very comfortable with our cost savings. I look at their teams. They've been very focused on what I would call sustainable cost reductions, changes in processes. Like I said in, I think, the Q3 call there, at Albian, we've been able to increase the productive capacity of the mine to 350,000 without really putting a lot of cost to it. Our teams are very focused on that. I feel very comfortable on that. The counter to it really that I see is the price of natural gas. Obviously, depending on your price of natural gas, that could impact some of the operating costs at Horizon and Thermal. The way I see it today, our teams are basically able to keep our costs in check.
Okay, great. Thank you.
Yep.
Your next question comes from Asit Sen with Bank of America. Please go ahead.
Thanks. Good morning, and thanks for all the details. If I could go back to slide 93, where you have laid out the low-risk volume additions over the near to medium term. Tim, you mentioned about egress outlook improving with line three and then optimization. If oil prices hold and if the infrastructure situation gets better, just trying to think about the timeframe and how you're thinking about thought process in terms of price trigger, infrastructure triggers, any other factors that you're considering. On growth beyond 2021, how should we think about growth relative to the 5% that you're outlining for 2021? What are the triggers, please?
Yeah. I'll start off with the 2021. Well, the 5% is still a very good, robust number for our company. I would think that in between the 3%-5% is probably fairly reasonable based on looking ahead on our capital forecast. I think right now there's so many different variables. As COVID maybe works through the system, we'll see what the demand piece does to pricing. Obviously, with the egress, we'll see if that happens here in Q3. That's an incremental couple hundred thousand and then finally Trans Mountain. I think from just a macro perspective, I think we can be very patient on those. What's really good is we're very nimble. If we see those opportunities to come to fruition in terms of egress and pricing, we're nimble enough to adjust.
I think today, it's hard to speculate with the variables we're seeing ahead of us here today.
Okay, great. Then just shifting to appreciate the net zero aspiration comments. Just wanted to understand, given your expertise in CCS, how are you thinking about expansion or further projects? Is it dependent on regulatory clarity? Then on that, if you could talk about the IPEP commercialization pathway given the pilot today, please.
Sure. Just with the carbon capture, a big part of it is understanding the opportunity ahead of us here in terms of where it's headed in terms of overall government regulation. Obviously, when you have a more solid vision of where the government wants to go with these things in terms of carbon pricing, then you can model it appropriately. Obviously from our perspective, what we want to do is do business that is very complementary to our business and adds long-term value versus being a drag on the system. We're doing the work in parallel. Obviously, we have a smaller part of a carbon capture at Horizon that we could expand easily. We're just right now doing the work under various scenarios to determine what's the most economic in terms of a go-forward path.
As far as IPEP, I'll let Scotford talk a little bit about that.
As I mentioned in my slides, what we're looking at, of course, is we want to ensure that we've got the capital requirements well understood. That's going to take a little bit more time to run through, as I talked about. If we like what we see, we would start planning for a commercial size component of about 750 tons per hour. That is just one of the components that makes up that 6,000 ton per hour train, which is ultimately what you're looking for, is 6,000 ton per hour trains. It's just one component of that. We would want to make sure that size of a unit is well-engineered and well understood, and then executed before we would implement it into the larger scale full train operation. That's what we're looking at.
In terms of timing, we'll step through that in due course here. First off, making sure we got all of the engineering understood here correctly, right?
Thanks. Appreciate the call.
Okay.
Again, if you would like to ask a question, please press star, then the number one on your telephone keypad. Your next question comes from Manav Gupta with Credit Suisse. Please go ahead.
Hi. You have a substantial position in Montney, as you pointed out, and what we are seeing out there is very narrow differentials. In fact, condensate is trading over WTI. I'm just trying to understand what's your differential outlook for condensate, and does that play into the Montney goals that you are targeting in 2021?
Yeah. The Montney that we're targeting at Wembley is actually light oil, so it'd be priced at essentially WTI. Really that's the key, is that the Wembley is a light oil play.
Okay. A follow-up question is, at some point, Canada might implement a lower carbon program like California, that was discussion until COVID hit, and obviously it got postponed. I'm trying to understand if a program like that is implemented somewhere in 2021 for 2022 startup, does that impact the way CNQ does business in any way?
It's hard to speculate. If you're referring to the clean fuel standards, there is actually 2 components. One is a liquid component, and then one is a natural gas component. Until the government issues what their program is, it's very difficult to say. They've always indicated to industry that they want to ensure that we are competitive on a global basis. To me, I'm not going to speculate yet until we see some of the details. I would think they would hold us to that light in that they want to make sure we have a competitive business model here in Canada.
Thank you.
You're welcome.
Your last question comes from Greg Pardy with RBC Capital Markets. Please go ahead.
Yeah, thanks. Just a couple of quick follow-ups. Mark, just within that $45 WTI work that you guys have run, can you just comment on what current taxation is sort of embedded in that forecast? The other thing is just mining oil sands OpEx. I'm just wondering if you could give us a ballpark there as well.
Greg, I'll maybe defer some of this modeling stuff to the IR group. We do at this forecast have a cash tax component, but maybe we can take that one offline and just run through all the different components that go in.
Okay. Terrific. Thanks.
On the oil sands mining, essentially, we're looking to hold it flat over next year, and that's with the higher gas price, the CAD 2.50 gas. Our teams are doing a really good job in terms of offsetting the extra cost of gas by keeping our gas flat.
Terrific. Thanks very much again.
You're welcome.
There are no further questions at this time. Mr. Bieber, I turn the call back over to you.
Thank you, operator. I would like to thank everyone for joining us this morning on the call. As always, if you do have any questions, please don't hesitate to give our teams a call. Take care.