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Canada needs more pipelines, CAPP states

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World Pipelines,

Canada will need more pipelines built through to 2030 to transport an additional 1.3 million bpd of oilsands production to markets across North America and around the world, the Canadian Association of Petroleum Producers (CAPP) announced in its ‘2017 Crude Oil Forecast, Markets and Transportation’ report.

Overall Canadian oil production will grow to 5.1 million bpd in 2030, up from 3.85 million bpd in 2016. This 1.3 million bpd growth will be driven by a 53% increase in forecasted oilsands production of up to 3.7 million bpd in 2030 from 2.4 million bpd in 2016.

Conventional oil production is expected to remain flat, producing 884 000 bpd on average throughout the outlook.

New offshore production from the Hebron project in Newfoundland and Labrador, expected at the end of 2017, will contribute to a rise in eastern Canadian output to 307 000 bpd by 2024, but thereafter, due to natural declines, forecasted production will drop to 186 000 bpd by 2030.

The projected growth will exceed the existing pipeline transportation capacity, highlighting the urgent need for pipelines heading east, west, and south. Today, the pipeline network can transport 4 million bpd of oil and oil products but by 2030 it will need to move more than 5.5 million bpd. Increased pipeline capacity to reach more Canadians and new, growing markets around the world will ensure Canada remains globally competitive.

Capital spending in the oilsands is expected to decline for the third consecutive year to CAN$15 billion in 2017 from CAN$34 billion in 2014. Drilling by conventional crude oil producers is forecast to increase 70% compared to 2016 levels, but will still be 40% lower than in 2014.

At present, Canada’s oil industry faces a number of challenges tempering long-term growth prospects, including uncertainty related to provincial and federal climate change policies in Canada, potential protectionist policies in the US, and diverging regulatory efficiencies between Canada and the US.

Among its biggest challenges continues to be pipeline constraints. In the past year pipelines such as the Trans Mountain expansion project, Enbridge Line 3, and Keystone XL have been approved and, when built, will provide much-needed pipeline capacity to access North American and Asian markets. However, Energy East – a portal connecting Canada to Europe and beyond – is still needed to further connect Canada’s growing supplies to diverse markets.

Tim McMillan, CAPP President and CEO, stated: “The urgent need for new pipelines to increase our competitiveness continues to be one of the biggest challenges facing our industry. Without access to emerging new markets we’re putting our economy at risk […] Canadian oil producers continue to face a number of challenges such as industry competitiveness, regulatory uncertainty, and low commodity prices, in addition to lack of access to new markets. The success of Canada’s energy future relies on the ability to overcome these challenges.”

In June, CAPP released the Global Energy Pulse, its first-ever international research into world views on oil, natural gas, Canada and the world’s energy future. Among the key findings, Canada ranked No. 1 as the preferred supplier for oil and natural gas to global markets.

McMillan noted: “It is imperative we get our oil to markets in all directions to ensure fair market value for our natural resources, and provide the world with a source of safe, reliable and secure energy from Canada.”

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Canada pipeline news