Canada is poised to see a solid jump in oil production within the next two decades, but still needs to score a hat trick — building three new pipelines — to make that happen.
It also needs U.S. President Donald Trump to not mess up the US$91 billion in energy trade that flows back and forth across the 49th parallel.
On the opening day of the 50th Global Petroleum Show, the country’s largest oil and gas group unveiled a new energy outlook for Canada, forecasting total crude production to jump by a third and reach 5.6 million barrels a day by 2035.
Tim McMillan, CEO of the Canadian Association of Petroleum Producers, said the sector is expected to boost total output by 1.4 million barrels a day (b/d) during this period — roughly equal to one year’s growth in global demand — and ahead of last year’s forecast by about 500,000 b/d.
While conventional oil production is expected to remain flat and East Coast offshore output will dip, northern Alberta’s oilsands will continue to expand to 4.2 million barrels a day.
For the sector and the province, the promise of more growth means additional employment and revenues. However, it will require petroleum producers to gain confidence and sanction new projects, or expand existing ones, after a steep spending slowdown that followed the 2014 oil price crash.
McMillan and others in the industry say several obstacles could derail those growth expectations: the ability to build three proposed pipeline projects, attract more investment and improve the sector’s competitiveness.
The oilpatch largely supports the Trudeau government’s decision to buy the Trans Mountain pipeline from Kinder Morgan and expand the existing oil line to the West Coast.
But it’s not enough.
“We need to see not just Trans Mountain move forward, we need to see the Line 3 expansion completed, we need to see Keystone XL built and at the end of our forecast, we need all of those projects,” McMillan told the crowd.
“Building the pipelines won’t get us all of the way there.”
Rising regulatory costs and delays, along with the drive by the Trump administration to lower tax rates, are also making it harder to attract capital to this country, according to industry players.
Imperial Oil recently noted it’s been waiting more than four years to get approval on its new Aspen oilsands project, but hasn’t received a final decision.
The CAPP study pointed out capital spending in the U.S. oilpatch soared by …read more