A recent star.com article shows that even though Canada’s oil industry is planning on scaling back its long-term projection growth in production from their oil sands, the projections are going up according to the Canadian Association of Petroleum Producers (CAPP). The CAPP projects that come 2030 that annual oil production will grow to 83 percent.
So a production of 3.5 million barrels a day is projected to be 6.4 million barrels per day according to CAPP. This is an annual prediction that will require a “dramatic growth” in the capacity of Canadian pipelines but new projects are coming towards the oil industry in bunches with crude being delivered to the Pacific, Atlantic, and U.S. Gulf coasts.
The projections for CAPP have actually gone down though. In 2013 the projection that 6.7 million barrels would be produced daily by 2030 (now 6.4 million) but this is likely a result because of the oil sands production of only 1.9 million barrels a day in 2013. And for oil sands production that was first considered to reach 5.2 million barrels a day in 2030, CAPP lowered the projection to 4.8 million per day by 2030.
So why has CAPP changed their projections? The Star article explains that in CAPP’s released statement the reason is “increasing uncertainty” when it comes to the capital availability and project timing overall.
Rising costs have provided some of the uncertainty, according to CAPP Vice President, Greg Stringham. Natural gas prices have risen nearly 50 percent since the last year and capital costs have increased by 4 and 5 percent on oil sands projects. These changes have caused companies to “re-evaluate” their secondary and tertiary phases, said Stringham and they are trying to stretch these phases over a longer period of time.
It is expected that new production techniques will hold the oil price relatively flat.