Mining Exploration News

In its annual forecast of Canada’s crude oil production through 2020, the Canadian Association of Petroleum Producers said it expects the country will produce 4.5 million barrels of oil per day (bpd) in 12 years, double current output, with U.S. refiners taking the lion’s share of the supply increase.

And while the group called for 2015 production from the oil sands of 3.4 million bpd last year, its updated study calls for output from the region to be just 2.8 million bpd as development takes place at a more measured pace.

“This is the reality. The oil sands’ potential is still there and it’s still in our forecast, but it’s just being stretched out a little longer,” said Greg Stringham, CAPP’s vice-president, markets and fiscal policy. Companies “are finding it now just takes longer from when they start to when they actually have oil.”

While the forecast calls for output to more than double from the 2.7 million bpd Canada produced in 2007, the 2020 figure is 100,000 bpd below last year’s forecast.

The rise in output will come as more projects are completed in the oil sands region of northern Alberta, which contain 173 billion barrels of oil, the biggest crude reserves outside the Middle East.

But optimistic timetables for completing the complex, multibillion-dollar facilities needed to produce the tar-like bitumen and upgrade it to refinery-ready crude have been stretched to accommodate regulatory delays, rising materials costs and a tight labor pool.

In recent weeks, Norway’s StatoilHydro pushed back plans for a bitumen upgrader by two years to 2016, blaming high costs. Total SA of France warned that regulatory delays may lengthen the schedule for its Joslyn oil sands project and North West Upgrading said shaky debt markets were bedeviling financing plans for its C$4.2 billion ($4.1 billion) plant.

EXPORTS TO U.S. TO RISE

The study suggests that pipeline firms must plan for even higher growth and build sufficient capacity to handle 5 million bpd of oil shipments by 2020.

CAPP said pipeline projects already in the works, capable of carrying an additional 1.1 million barrels a day to markets in the U.S. Midwest and the refining hub on the Gulf of Mexico, will be sufficient to handle rising Canadian oil exports until 2013, after which new lines will be needed.

The oil-industry lobby group said in its forecast that it expects U.S. refinery demand for Canadian oil to climb to 3.5 million bpd by 2015, from 1.6 million bpd in 2007, even though handling some varieties of Canadian crude can require expensive new equipment and retooling.

The U.S. refiners “are finally starting to expect (deliveries of) this oil and are beginning to make the changes that are necessary,” Stringham said.

Canadian refiners are expected to use 1.1 million barrels daily of Western Canadian oil by 2015, up from 825,000 bpd last year.

CONVENTIONAL OUTPUT WANES

Booming investment in the oil sands region will overshadow more conventional oil production, which has been waning since the late 1990s as big discoveries become rare and existing fields are depleted, particularly in Western Canada, which accounts for 90 percent of conventional output.

Conventional production is expect to drop to 705,000 bpd by 2020, nearly a third lower than last year, though the study noted the rate of decline has been slowing as output in Saskatchewan grows because of new discoveries in the prolific Bakken field, touted as the biggest new oil find in Canada since 1957.

Output from offshore projects in the Atlantic province of Newfoundland is expected to begin declining this year from the 369,000 bpd reached in 2007 as existing fields age.

($1=$1.02 Canadian)

source : globeinvestor.com

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