CANADA POISED TO TREAD GLOBAL STAGE
Canadian oil production continues to chart a path of steady growth
Canada’s oil production is on target to almost double over the next two decades, from 3.5 million barrels per day in 2013 to 6.4 million barrels per day by 2030. This is the result of strong demand from markets in North America and around the globe, says a forecast released by the Canadian Association of Petroleum Producers (CAPP).
“The global market, including Asia, India and Europe, is looking for supply diversity due to continued uncertainty in the Middle East and Russia,” says CAPP vice-president Greg Stringham. “Canada’s large reserves and reliability make it an attractive alternative source. Connecting to these opportunities will provide the market diversity and economic benefits that Canada seeks.”
In the United States, refineries in Washington and California are expected to double their demand for Western Canadian crude oil from 198,000 barrels per day to 392,000 barrels per day, as they seek to replace declining traditional sources of supply.
Athome, refineries in Quebec and Atlantic Canada currently import 90% of their crude oil requirements. This market alone represents some 640,000barrels per day that can be supplied by Western Canada.
While increases in total oil production bring opportunities for expanded markets at home and abroad, challenges persist.
Additional transportation capacity is needed to move product to market. “We have sufficient transportation mechanisms available to move current production, but expansion is needed to take us to the next level,” says Stringham.
Pipelines remain the primary method of moving crude oil because of the relatively low costs and ability to continuously deliver large volumes. A number of pipeline project proposals have the potential to service Canada’s east and west coasts and offshore markets (Trans Mountain expansion, Northern Gateway, Energy East) and the U.S. Gulf Coast (Keystone XL). However, uncertainty remains as to when these expansions may come online. Northern Gateway, a pipeline that would ship crude oil from the Edmonton area to a new tanker port at Kitimat, received approval from the federal government this month, but Keystone XL continues to be delayed.
This delay in pipeline capacity means producers are tur ning to rail as an alternative means of transportation. Shipments by rail are expected to triple over the next two years, and this is providing the stimulus for capital investment in new loading and unloading facilities. This added flexibility will allow delivery of multiple crude types to multiple destinations for both the short and long term.
Production forecasts depend on the continued development of pipeline, rail and tanker transportation capacity to allow product to reach existing and new markets.
Oils ands production remains the primary contributor to growth and is forecast to grow from 1.9 million barrels per day in 2013 to 4.8million barrels per day in 2030. However, the underlying story is the continuing resurgence of conventional oil production following several decades of decline.
A decade ago, conventional oil production was expected to drop to 0.5 million barrels perday. “New technology and applications, including horizontal drilling and multi-stage hydraulic fracturing techniques, have brought it back to a much higher level with most of the increase coming from an old basin that most considered was past its prime,” notes Stringham. “These technologies a real so helping minimize environmental impact by reducing greenhouse gas emissions intensity and freshwater use, and minimizing our footprint.”
Over the forecast period, conventional oil production in Western Canada is expected to increase slightly from 1.3 million barrels per day in 2013 to 1.5 million barrels per day in 2030.
In Atlantic Canada, offshore production is expected to decline to about 90,000 barrels per day. However, three recent promising discoveries in the Flemish Pass Basin may increase future projections for the region.
Canada’s oil resources now are clearly on a global stage, from global investment and secure supply to environmental and innovation leadership. Moving into this new era will mean addressing new challenges but will provide benefits to Canadians as the industry builds responsibly on Canada’s strong resource base.