By OGJ editors
HOUSTON, June 2 -- Canadian oil production will increase to 4.7 million b/d in 2025 from 2.8 million b/d in 2010, according to the latest forecast from the Canadian Association of Petroleum Producers (CAPP).
This is about 385,000 b/d higher than previously forecast, due primarily to higher conventional oil production and the inclusion of some additional in situ projects that were previously put on hold. While the forecast calls for more robust growth in Canadian oil production compared with the previous year, it remains less than forecast in 2008.
CAPP’s annual 15-year outlook for Canadian oil production provides a view of prospective changes in supply and integrates the forecast with an updated assessment of potential market options and the corresponding pipelines needed to reach these markets. The report also examines the problems that producers face in finding new markets for rising production.
Conventional oil
CAPP’s forecast for conventional production shows a slight annual increase for the next several years in contrast to the steady annual decline shown in previous outlooks. This can be attributed to the success of horizontal multifracturing technology over the last 3 years combined with the expectation of continued strong medium-term oil prices, which will continue to stimulate investment, the report said.
The forecast calls for total conventional production to climb to 985,000 b/d in 2013 and 2014 from 970,000 this year, then starting to decline in 2015 to 983,000 b/d. By 2020, CAPP forecasts that Canada’s conventional oil production will average 876,000 b/d, and then fall to 749,000 in 2025.
Over the medium term, CAPP forecasts moderate increases in Saskatchewan light oil production. The Bakken play is expected to continue to perform strongly, and there is increased interest in horizontal drilling in emerging oil plays like the Lower Shaunavon in the southwest of the province, the Viking in west-central Saskatchewan around Kindersley, and the Birdbear in the northwest of the province near Lloydminster, according to the report.
CAPP said that similarly, the Cardium formation in Alberta and the Viking formation in central and eastern Alberta and west-central Saskatchewan have been identified as formations well suited for increased use of horizontal drilling since they contain large deposits of oil-in-place with historically low recovery rates.
“Industry continues to focus on acquiring oil well licenses as a result of strong oil prices. Oil-well permitting licenses are up significantly in Alberta, Manitoba, and Saskatchewan—at decade-high rates across western Canada,” CAPP said.
CAPP’s expected forecast for oil sands, which currently comprises 58% of Western Canada’s total oil output, calls for production to jump to 2.156 million b/d in 2015 and to 3.7 million b/d in 2025 from 1.47 million b/d in 2010.
Of the remaining established reserves in Alberta, 80% is considered recoverable by in situ methods while 34 billion bbl can be recovered by surface mining. There are also smaller deposits in northwest Saskatchewan next to the Athabasca oil sands deposit. Recovery of raw bitumen using in situ methods is set to surpass production from mining methods by 2016, according to the forecast.
US market for Canadian crude
US demand for western Canadian oil will reach 2.7 million b/d in 2015, up from 1.8 million b/d in 2010, according to CAPP. Although total US oil demand is not expected to increase much, western Canadian oil should supply a growing share of this market if the necessary pipeline infrastructure is put in place to enable greater access to the major markets.
Declines in exports from other major suppliers to the US is expected in the near term due to a combination of falling production, increased domestic consumption, or a focus on expansion into new export markets such as Asia, the report said.
Despite the expected decline in exports from Mexico and Venezuela, Canadian heavy producers cannot increase their market share on the US Gulf Coast due to infrastructure constraints.
CAPP estimates that in 2015, this Petroleum Administration for Defense Districts III (PADD III) market could receive at least 380,000 b/d of western Canadian oil based on contractual commitments on the Keystone XL pipeline if the pipeline receives US regulatory approvals.
A number of other pipeline projects also are being proposed to transport the current glut of US and Canadian light crude oil in PADD II to the PADD III refinery market, CAPP said.
