After three consecutive years of cutting its long term oil production forecast, Canada's oil industry is now raising its expectations for how much crude the country will produce in the coming decades.
Oil production will increase from 3.85 million barrels per day in 2016 to 5.1 million in 2030, according to the Canadian Association of Petroleum Producers (CAPP) in its 2017 forecast released on Tuesday.
The main growth driver will be the Alberta oilsands, which is expected to grow production by 53 per cent during that time frame.
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As Canadian companies continue to pull more oil out of the ground, the industry is renewing its calls for more export pipeline capacity.
Currently, there is space to transport about four million barrels per day of oil and other products, but the industry will require about 5.5 million barrels per day by 2030, according to CAPP.
"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," said Tim McMillan, the president and CEO of CAPP in a statement.
Kinder Morgan is signing contracts with construction companies and plans to start work in September on its new $7.4-billion Trans Mountain expansion pipeline, which would ship materials from Edmonton to Vancouver. At the same time, a new NDP-Green party partnership could form government in B.C. and start acting on election campaign promises to kill the project.
If constructed, Trans Mountain would provide the oilpatch with additional pipeline space of 590,000 barrels of oil per day.
CAPP's president said he spoke with the leader of B.C.'s NDP party during the election campaign, but they haven't talked since then.
Oilsands investment plunges
Energy company spending in the oilsands is expected to decline for the third consecutive year to $15 billion in 2017 from $34 billion in 2014, while conventional oil drilling is estimated to fall by 40 per cent compared 2014.
"The investments we are seeing in the upstream, certainly in the oilsands, are a bit of a canary in the coal mine. That lack of investment or pullback of investment won't materialize in production growth slowing down until that 2020 and beyond because projects that are currently in the pipeline will come on stream and will add to our production," said McMillan during a conference call.
Oil prices continue to hover around $50 a barrel, after surging above $100 in 2014 before a massive price crash.
"With the energy sector really driving the economy over the last decade and a half, lower investment and capital and slower production growth, will have an effect across Canada," said McMillan.
CAPP bases its forecast on historical data and what it hears from its member companies in the oil industry using a survey about each company's expected production.
Meanwhile, the group representing oilpatch drillers is revising up its forecast for this year because of stabilizing oil prices and a boost in drilling during a relatively cold winter.
The number of wells drilled this year is now expected to be 6,842, an increase of 2,177 from the original forecast in November. The number of operating days is estimated to be 71,839, up 22,859.