CAPP: Oil sands will drive 40% hike in crude output
 Click here to go to the full PDF version of this issue, with any maps, photos or other artwork that appears in
some of the articles.
Gary Park Petroleum News Calgary Correspondent
The case for Alberta’s oil sands becoming a vital component of the global supply picture got another strong endorsement from the Canadian Association of Petroleum Producers.
In its 2004 Canadian crude oil production and supply forecast, the lobby group said July 15 that oil sands output will raise Canada’s volumes by 40 percent, or 9.6 percent annually, over the next 10 years to 3.62 million barrels per day from 2.48 million bpd.
At that level, the oil sands would account for 71 percent of Canada’s total volumes, compared with just under 35 percent in 2003, with 1.75 million bpd coming from mining operations and 851,000 bpd from the deeper in-situ projects.
Further reinforcing the importance of the 175 billion-barrel resource in northern Alberta, the association said conventional light and heavy production over that same period will shrink to 600,000 bpd from 1.12 million bpd, meaning the oil sands will climb to 2.6 million bpd from today’s 1 million bpd.
The report projects that production of conventional light will drop to 334,000 bpd in 2015 from 622,000 bpd in 2003, while conventional heavy will decline to 266,000 bpd from 497,000 bpd.
“The growing production will serve Canada’s strong domestic market and our important export markets in the U.S.,” said association analyst Paul Unruh.
Underpinning the oil sands growth, the association report said investment spending will exceed C$30 billion over the next decade as new projects or expansions come on stream. Analyst says high prices make sands attractive investment Brian Prokop, an analyst with Peters & Co., told the Globe and Mail that the oil sands, despite their higher operating costs, are an attractive investment opportunity because of current high crude prices and expectations that longer-term prices will be even higher.
He said that unless producers are involved in the oil sands, now recognized as the second largest oil reserve outside of Saudi Arabia, they “won’t be involved in the growth portion” of the industry.
The findings are based on a survey of association member companies who generally believe that long-term oil prices will be in the range of US$25 per barrel of West Texas Intermediate.
In a higher-growth case, which the association thinks is less likely, production could exceed 4.1 million bpd, including a lower decline rate for conventional crude to 826,000 bpd by 2015.
But the more moderate case will be an important guide in helping assess the need for new pipeline capacity from Western Canada to various markets, including the need for blending light synthetic crude with bitumen into a synthetic-bitumen mix that can be carried by pipeline.
For all of Canada, the association has forecast that 3.34 million bpd of the 3.62 million bpd target will come from Western Canada, with most of the remainder produced in the Eastern Canadian offshore.
| 