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Oil sands pump Canada’s oil prospects By 2015, Canada could be among top five oil producers, with 50 percent of output from increased oil sands development Gary Park Petroleum News Canadian Correspondent
The staggering pace of oil sands development should boost Canadian oil production by 50 percent over the next decade to 3.86 million barrels per day, the Canadian Association of Petroleum Producers has forecast.
That output target is 300,000 bpd higher than last year’s prediction, reflecting an across-the-board surge in oil sands development.
“Canadian oil producers are increasing production to meet rising global demand,” said Greg Stringham, the association’s vice president, markets and fiscal policy.
If the goal is reached, Canada could join the leading five oil producing nations.
In updating its numbers, CAPP made a fresh evaluation of oil sand ventures and found that many of them are moving ahead faster than originally anticipated.
As a result, the association set a 2015 target of 1.39 million bpd for bitumen and 1.3 million bpd for synthetic crude, compared with last year’s combined volumes of 994,000 bpd.
Of the other categories, light and medium crude production from the four Western Canadian provinces and Northwest Territories is expected to continue its steady slide from 593,000 bpd in 2004 to 382,000 bpd by 2015, although that decline could be slowed by improved recovery techniques.
The Northwest Territories sole producing field at Norman Wells is targeted for a drop to 14,000 bpd from last year’s 21,000 bpd, although a return to oil exploration in the Central Mackenzie Valley, spurred on by a Northrock Resources find earlier this year, could change that outlook
Conventional heavy crude in Alberta and Saskatchewan is forecast to follow a similar trend to 344,000 bpd from 497,000 bpd last year.
The East Coast offshore is on track to double output over the decade to 290,000 bpd as the Hibernia and Terra Nova projects step up production and White Rose comes on stream. Oil sands volume concerns But there are concerns, dominated by the challenge of meeting pipeline needs that could affect production levels.
David MacInnis, president of the Canadian Energy Pipeline Association, said the prospect of an additional 1.7 million bpd from the oil sands region is good news for his sector, provided three key issues can be handled.
He said the industry must avoid the regulatory delays that have affected the Mackenzie Gas Project.
In addition, a rise in the cost of materials and a shortage of construction labor could undercut hopes of achieving the production goals.
CAPP also presented a “constrained” case that could lower its overall 2015 target to 3.59 million bpd, 270,000 bpd under its “moderate” case, all of that shortfall covered by a decrease in oil sands output.
The inhibiting factor will be the availability of lighter commodities such as condensate, pentanes and synthetic crude to blend heavy oil and bitumen into “syn-bit” to permit the blend to flow more easily through pipelines.
CAPP also cautions that although syn-bit is similar to medium sour crudes that are used in U.S. refineries, it could take “several years” for syn-bit to find acceptance in the marketplace and realize medium sour prices.
If syn-bit prices remain more closely linked to heavy crude, the blend will become less economical when the gap widens between light and heavy oil.
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