GPS 2018: CAPP says growth of Canadian oil production remains constrained
CALGARY -- During the opening day, Tuesday, of this year’s Global Petroleum Show in Calgary, the Canadian Association of Petroleum Producers (CAPP) released its 2018 Crude Oil Forecast, Markets and Transportation report. In that report, CAPP said that Canada “needs to improve its competitiveness and get pipelines built, if it wants to transport an additional 1.6 MMbopd of Western Canadian production growth, by 2035, to new, emerging markets.”
CAPP went on to say that an increasing competitiveness gap continues to impede Canada, when it comes to attracting energy investment. According to the association, the country’s inability to get major pipelines built, and create and implement efficient regulatory policies---along with the cancellation of a series of projects, such as Northern Gateway, Pacific Northwest LNG and Energy East---has eroded investor confidence in Canada’s energy sector.
CAPP President and CEO Tim McMillan delivered his group’s outlook in person at GPS, as the opening keynote speaker. He said, “Canada is falling behind its competitors, losing the opportunity to supply the world with oil produced the Canadian way. The U.S. is increasing its oil exports to the same emerging markets Canada is targeting.” He pointed out that the U.S. is aggressively streamlining and reducing costs associated with regulations. Capital spending in the U.S., according to McMillan, rose 38% to $120 billion during 2017, while investment in Canada fell to $45 billion.
“Total Canadian oil production is expected to increase to 5.6 MMbpd by 2035,” said McMillan. That’s due mainly due to a rise in oil sands production to 4.2 MMbpd, from 2.65 MMbpd in 2017. This is an improved outlook from a year ago, when CAPP forecast Canadian oil production would rise 33%, to 5.12 MMbopd by 2030, up from the 2016 prediction of 4.93 MMbopd.
Western Canada accounts for about 95% of the country’s total production, with conventional oil representing more than 1.0 MMbpd of the regional total. Conventional output is expected to remain flat to 2035, while the greatest potential for growth will be in the liquids-rich Monteney and Duvernay formations. Meanwhile, output in Eastern Canada will rise to 290,000 bpd by 2025 from major offshore projects, including Hebron, Hibernia, Terra Nova and White Rose, says CAPP. However, the associtions adds that production will then drop to just 70,000 bopd by 2035, barring significant new discoveries.
McMillan jumped briefly into the public spat between U.S. President Donald Trump and Canadian Prime Minister Justin Trudeau. “If there’s ever been a time for reflection about why wouldn’t we have optionality, it is now,” said McMillan. Referring to Trump’s remarks about trade with Canada being “fool trade,” McMillan said that Canadian politicians need to assist in building new pipelines to the East Coast and to the northern British Columbian coastline, to reduce Canadian dependence on the U.S. market.
McMillan might have been in a testy mood about pipeline capacity, knowing that Texas Secretary of State Rolando Pablos would follow him in the first plenary session and tell the crowd that at least 14 new pipelines are being built from Texas to Mexico, mostly to carry natural gas.
