The Canadian Association of Petroleum Producers (CAPP) released its annual crude oil production, supply, markets and pipelines outlook.
The highlights of this year's outlook include:
- Oil supply is slightly below last year's forecast in the early years, but slightly higher in last few years of the forecast period;
- The growth in oil sands more than offsets a gradual decline in conventional crude oil production;
- A first-time refinery survey indicates that the refinery demand outlook for western Canadian crude oil is aligned with the supply forecast;
- The pipeline projects that are currently in various stages of development will provide sufficient capacity to the 2010 - 2012 period, if they receive regulatory approval and proceed according to plan; and
- There are numerous pipeline proposals to various markets in North America post 2012, but given the timelines to obtain regulatory approvals and to construct; the market must now focus on the next round of new capacity.
"The changing mix of Canadian crude types from the traditional conventional crude oil to oil sands upgraded light synthetic crudes and heavy oil blends is also a big issue for the industry," said Greg Stringham, CAPP Vice President, Markets and Fiscal Policy. "It's very important that pipeline capacity is available on a timely basis, and that refineries are able to process both the higher volumes and the changing mix."
CAPP's 2007 production and supply forecast contains two cases, one showing a pipeline planning case while the other is a more moderate case that reflects the potential impacts of constraints on labour, materials and regulatory processes. The higher case is intended to be used by industry to plan for and develop pipeline projects to ensure adequate and timely transportation capacity from western Canada. In the Pipeline Planning Case, western Canadian crude oil supply is expected to increase from 2.4 million barrels per day (b/d) in 2006 to almost 5.3 million b/d in 2020 while in the Moderate Growth Case, western Canadian crude oil supply is projected to grow to about 4.6 million b/d.
For the first time, CAPP surveyed downstream refiners asking for their long-term plans to process western Canadian crude oil. The results indicate that demand for western Canadian crude oil by Canadian refineries is expected to rise from 765,000 b/d in 2006 to almost 1.1 million b/d in 2015, a 44 per cent increase. Over the same period, United States refinery demand for western Canadian crude is projected to increase from about 1.6 million b/d to almost 3.1 million b/d.
The growth in crude oil supplies will need more pipeline capacity to ensure access to both new and existing markets. Numerous new pipeline proposals and expansions of existing pipelines have been announced in recent years. Producers and shippers are assessing the alternatives to determine which projects will get market support.