The oilsands will continue to push Canadian crude oil production through 2030 according to the Canadian Association of Petroleum Producers.
In its annual forecast CAPP expects oilsands production to total 3.7 million barrels per day, which is down from last year’s forecast of four-million barrels daily, but is still a significant increase from the 2.4 million barrels produced in 2015.
Growth in oil sands production could also be higher than forecast if in situ operators are able to respond with greater cost efficiencies, reads the report. The production capacity for in situ oil sands projects that have been approved but are not currently operation or in construction total 1.8 million b/d. These projects could provide additional production that may result in output greater than that reflected in this forecast or further growth beyond 2030, it said.
“We are projecting growth each and every year out to the end of our forecast. We’re going to add about a million barrels of production for Canada over the next 15 years but that is about 400,000 barrels less growth than we put forward last year,” said Tim McMillan, CAPP president and CEO, speaking by phone to MyMcMurray.
He said while the wildfire had an impact on this year’s numbers there isn’t any expectation that would carry forward to other years but he said there are a few reasons for the reduction in the growth number.
“One is, globally, there’s been a pull-back and a reassessment of investment decisions in the out years and Canada is not immune to that, but two I think that there is a realization about Canada’s competitive position and with shale becoming a bigger investment opportunity, Canada needs to compete,” he said.
“That means if we want to be competitive we need to be looking at pipelines and market access, at our regulatory system. It is one of the world class regulatory systems but is it as efficient as it could be and just for industry we need to be looking at our costs, are we leveraging technology fully, all of these will help reposition Canada to be more competitive and attract more investment and ultimately have larger production,” he said.
The report doesn’t presume the outcome of the review of the Energy East pipeline or any other projects proposed across the country but McMillan said it does take company’s intentions into play.
“And it helps inform those decisions. Even in the short term we are today pretty much at pipeline capacity and we see growth between today and 2021 of 850,000 barrels a day just from the oilsands so, really, what that says is we need two pipelines between now and 2021 just to keep up with that growth and an additional 700,000 barrels a day from 2021 out to the end of the survey at 2030,” he said.
Advocating for technological innovation means more than just cutting costs, McMillan said, because those innovations usually lead to reduced emissions and environmental impact at the production level.
“That could be about logistics, it could be how we operate our mines, it could be using technology that uses less natural gas to separate the bitumen from the sand,” he said.
McMillan said despite some of the less optimistic aspects of the forecast it is, overall, a positive one.
“I think it is positive that we’re still growing but this is our third year in a row where we’re seeing that growth line getting lower and lower and starting to flatten,” he said. “So it’s positive. Canada is a large exporter globally. We have a phenomenal potential. But I hope it’s also a bit of a call to action that if we are going to reach our potential we cannot take it for granted that, as Canadians we can’t sit on our hands and think that it’s going to happen on its own.”
In order to reach the full potential pipelines will have to be build and innovation has to continue to take place, he said.
“We all have an opportunity to lend our voice to getting these important projects done,” McMillan said. “Canada’s energy future relies on our ability to get Canadian oil and gas to the people who need it,” he said. “Connecting Canadian supply to new and growing markets abroad, safely and competitively, is a top priority.”
The Association noted in its report that Canada’s current pipeline network has a capacity of about four-million barrels per day, in 2015 the average supply was 3.981 million barrels daily. CAPP predicts that with an additional supply of 850,000 barrels per day of oilsands crude expected to hit the market by 2021, oil supply will far exceed pipeline capacity in just a few short years.
“The need to build new energy infrastructure within Canada is clearly urgent,” McMillan said. “New pipelines will deliver more Canadian energy to Canadians, build our country’s economic prosperity and help Canada meet the world’s growing energy needs.”
CAPP estimates that total production of Canadian oil will increase by 28 per cent over the next 15 years growing to 4.9 million barrels per day by 2030, most of that will be supplied by the oil sands.
On a global level the International Energy Agency is forecasting that the demand for energy, including oil, will grow by 32 per cent by 2040, more than a quarter of that total demand will be from oil.
The National Energy Board reports that less than one per cent of Canadian oil is shipped overseas. Canada actually spent $17 billion in 2015 importing oil from the United States, Saudi Arabia, Algeria, Angola and Nigeria to fulfill refinery demand in Quebec and the Atlantic provinces to the tune of about 600,000 barrels per day.
“We need to get our oil to market so countries have the choice to source reliable, safe and secure oil and gas from Canada – a global energy supplier of choice for the future,” said McMillan.
CAPP’s forecast uses oilsands producer data collected in March and April each year; and its own analysis of historical trends, expected drilling activity and ongoing discussions with industry.
You can read the full report here.
