The Canadian Association of Petroleum Producers (CAPP) has said that the sharp drop in world oil prices over the past year is slowing the growth in Canadian oil production for the next 20 years. This was announced in a report titled, 2015 Crude Oil Forecast, markets and Transportation. CAPP has estimated that the production of Canadian oil will increase by 43% over 16 years, growing to 5.3 million bpd by 2030, up from 3.7 million bpd in 2014. Increased transportation capacity, in all forms, is therefore needed to meet growing domestic and international demand for Canadian oil.
The June 2014 forecast from CAPP estimated total oil production in 2030 at 6.4 million bpd. While both forecasts are similar during the early years of the forecast period, the slower pace of production in the latter years is the result of reduced capital spending intentions due to the sharp decline in global oil prices.
Greg Stringham, CAPP, Vice President Oilsands and Markets said, “demand for Canadian oil in Eastern Canada, the US and globally remains strong.”
The IEA has reported that global demand for energy, including oil, is expected to grow by 37% over the next 25 years. Canada has 173 billion bbls of oil, the third largest proven reserve in the world. However, today Canada only produces 3.7 million bbls of the 93 million bpd consumed around the world. Stringham continued, “we have the energy the world needs, our challenge is getting it there. Connecting Canada’s growing supplies to these markets safely and competitively is a top priority. Over the next two decades, we believe all forms of transportation will still be needed to move Canadian oil to markets to the east, west and south.”
The oilsands now remain the primary driver of oil growth in Canada, with production reaching 4 million bpd by 2030. Conventional oil production in Western Canada, including condensates, is projected at 1.3 million bpd by 2030. Eastern Canadian offshore production is forecast at 91 000 bpd by 2030.
In light of the current low oil prices, oil producers in Canada continue to evaluate their growth plans. This market uncertainty is reflected most in the oilsands growth range in this year’s forecast. The range indicates future projects are under review. Total oil and natural gas industry capital investment is forecast at US$45 billion in 2015, down nearly 40% from US$73 billion in 2014. In the oilsands, 2015 capital investment is forecast to be lower by almost a third to US$23 billion compared to US$33 billion in 2014.
Refineries in Quebec and Atlantic Canada currently import almost 80% of their oil from foreign sources. The US Gulf Coast, the largest refining cluster in the world with significant capacity to process heavy crude oil, is a major potential growth market for Canadian heavy oil. There is also a strong and growing demand for Canadian oil in Washington, California, Asia and Europe. To reach these markets, more transportation capacity and tidewater access are required.
Stringham commented, “several pipeline projects are at various stages in the regulatory process. These projects target three different markets and would provide Canadian producers with the market access necessary to become a truly global supplier.”
Pipelines are said to remain the primary transportation mode for large crude oil volumes over long periods of time, however it has been commented that delays in the startup dates for all pipeline proposals mean railways will continue to be used as a complement to pipeline transportation.
Edited from press release by Claira Lloyd