Need for pipelines ‘urgent’

Oil sands output seen growing, need for new pipelines ‘urgent’: industry group

SHAWN MCCARTHY

OTTAWA — The Globe and Mail

Published Thursday, Jun. 23, 2016 8:46AM EDT

Last updated Thursday, Jun. 23, 2016 11:20AM EDT

 

Canada’s oil sands sector is expected to increase output by 1.55 million barrels a day between now and 2030 despite depressed prices, and will require greater pipeline capacity to reach markets, the Canadian Association of Petroleum Producers said Thursday.

Basing its forecast on a survey of producers, CAPP expects the sector to add 850,000 barrels a day (b/d) between 2015 and 2021, largely as a result of projects begun before the 2014 price collapse.

Between 2021 and 2030, oil sands producers are expected to boost supply by 700,000 boe/d, despite the cancellation or delay of numerous major projects over the past two years. CAPP reduced its 2030 forecast by 300,000 boe/d from its 2015 outlook.

“The need to build new infrastructure within Canada is clearly urgent,” CAPP president Tim McMillan said. “New pipelines will deliver more Canadian energy to Canadians, build our country’s economic prosperity and help Canada meet the world’s growing energy needs.”

The industry has several proposed pipeline projects at various stages of review. But the proposals have generated considerable controversy across the country, with local politicians, First Nations and environmentalists voicing staunch opposition to each of the projects aimed at bring landlocked Western crude to Canadian coasts for export.

They include Enbridge Inc.’s 500,000 boe/d Northern Gateway, which was conditionally approved by the Conservative government but remains stalled; Kinder Morgan Inc.’s proposed expansion of its TransMountain pipeline to Vancouver, which the National Energy Board recommended be approved and is now undergoing further review by the Liberal government; and TransCanada Corp.’s 1.1-million boe/d Energy East line, for which the NEB will commence hearings in August.

The country’s pipeline network can move about four million b/d, which was roughly equal to the average production last year, the industry association said. There is also 754,000 boe/d in rail loading capacity, a more expensive means of transporting crude than pipelines.

All told, the industry expects to boost crude production by 28 per cent over the next 15 years to 4.9-million b/d. That’s 400,000 b/d lower than the 2030 forecast issued last year. The oil sands will account for 3.7-million b/d of that 2030 total, CAPP said.

“What is keeping it going is that global demand continues to increase,” Mr. McMillan said in an interview from Calgary. “All forecasts show the demand for crude oil is going to increase fairly substantially between now and 2030. And Canada has class resources, we have a sophisticated work force and we have a technology driven industry that can be that supplier of choice.”

He said Canada stands to be the “supplier of choice” for growing Asian markets like China and India, if producers can achieve reasonable access to those export markets. The International Energy Agency and BP PLC’s statistical review forecasts growing world demand to 2030, driven primarily by those Asian countries.

“If that oil demand in India and China isn’t being supplied by Canada, those investments will go to Venezuela and Nigeria and Angola and Saudi Arabia,” he said.

However, CAPP’s expectation for substantially increased global crude demand is based on an assumption that the world will not meet the goal of holding global temperature increase to less than 2-degrees Celsius above pre-industrial levels. Under a 2-degree scenario, the International Energy Agency sees global oil demand peaking and declining to 87-million barrels a day by 2035.

Even with lower demand, the world will need investment in new production to offset declines in existing fields, Mr. McMillan said. “There will have to be a substantial amount of new oil brought on that market and I think Canada should be picking up that supply due to our environmental records, investments and record,” he said.

Environmental groups argue the industry’s growth ambitions are inconsistent with Canada’s commitment to reduce greenhouse gas emissions at least by 30 per cent from 2005 levels by 2030.

“I can understand why oil companies want Canadians to believe our energy future is tied to what they are selling, but our governments should acknowledge that there is no market for this additional high carbon oil in a world that is acting on climate change,” Greenpeace Canada campaigner Keith Stewart said. “The only safe future for our economy and environment lies in accelerating the transition to renewable energy, not doubling down on tar sands expansion.”

About prosperitysaskatchewan

Consultant on Saskatchewan's natural resources.

Posted on June 23, 2016, in economic impact, oil, political. Bookmark the permalink. Leave a comment.

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