Canadian crude outlook lowered: CAPP

OREANDA-NEWS. June 11, 2015. Lower oil prices are challenging Canadian project economics and reducing capital spending, leading the Canadian Association of Petroleum Producers (CAPP) to cut its outlook for production.

CAPP, which represents the bulk of Canadian oil and gas producers, cut its annual long-term production forecast for 2030 by 17pc, reflecting a slower pace of growth than anticipated last June before prices started a 40pc drop. CAPP now expects crude production to grow from 3.7 million b/d last year to 5.3m b/d by 2030, down 1.1m b/d from last year's forecast.

The new outlook includes a two-tier forecast for oil sands production, outlining a "no new project" scenario along with one of additional capacity. In the lower range outlook, including only projects that are operating or under construction, output reaches 3.07m b/d by 2020, then drops to 2.97m b/d by 2030. The new capacity scenario would add an additional 0.01m b/d by 2020 and 980,000 b/d by 2030, CAPP said.

Last year's more optimistic outlook saw Canadian oil sands production increase to 3.2m b/d in 2020 and 4.8m b/d in 2030.

The timely development of infrastructure to obtain market access remains a continuing concern to CAPP as many in-service dates on major export projects, such as Keystone XL and Northern Gateway, have been delayed.

Refineries in Quebec and Atlantic Canada represent a potential 500,000 b/d market for Canadian producers, which are challenged by imports from the United States that have more than doubled, representing 60pc of foreign imports.

Canadian producers are set to capture a growing portion of the 2mn b/d of heavy oil that the US imports from other countries. By 2020 Canadian heavy imports to the US are forecast to be at least 468,000 b/d, about double the 235,000 b/d Canada currently supplies.