Canada will need more pipelines built through to 2030 to transport an additional 1.3 million barrels per day of oil sands production to markets across North America and around the world, the Canadian Association of Petroleum Producers (CAPP) announced today in its 2017 Crude Oil Forecast, Markets and Transportation report.
Overall Canadian oil production will grow to 5.1 million bbl/d in 2030, up from 3.85 million bbl/d in 2016. This 1.3 million bbl/d growth will be driven by a 53 per cent increase in forecasted oil sands production of up to 3.7 million bbl/d in 2030 from 2.4 million bbl/d in 2016. Conventional oil production is expected to remain flat, producing 884,000 bbl/d on average throughout the outlook. New offshore production from the Hebron project in Newfoundland and Labrador, expected at the end of 2017, will contribute to a rise in eastern Canadian output to 307,000 bbl/d by 2024, but thereafter, due to natural declines, forecasted production will drop to 186,000 bbl/d by 2030.
The projected growth will exceed the existing pipeline transportation capacity, highlighting the urgent need for pipelines heading east, west, and south. Today, the pipeline network can transport 4.0 million bbl/d of oil and oil products but by 2030 it will need to move more than 5.5 million bbl/d. Increased pipeline capacity to reach more Canadians and new, growing markets around the world will ensure Canada remains globally competitive. Capital spending in the oil sands is expected to decline for the third consecutive year to $15 billion in 2017 from $34 billion in 2014. Drilling by conventional crude oil producers is forecast to increase 70 per cent compared to 2016 levels, but will still be 40 per cent lower than in 2014.
At present, Canada’s oil industry faces several challenges tempering long-term growth prospects, including uncertainty related to provincial and federal climate change policies in Canada, potential protectionist policies in the U.S., and diverging regulatory efficiencies between Canada and the U.S. Among its biggest challenges continues to be pipeline constraints. In the past year pipelines, such as the Trans Mountain Expansion Project, Enbridge Line 3, and Keystone XL have been approved and, when built, will provide much-needed pipeline capacity to access North American and Asian markets. However, Energy East – a portal connecting Canada to Europe and beyond – is still needed to further connect Canada’s growing supplies to diverse markets.
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