The Canadian Association of Petroleum Producers (CAPP) has called on the government to frame policy measures to bridge the ‘competitiveness gap’ that is impeding investment in the country’s energy sector.
The industry body lamented the absence of efficient regulatory policies and highlighted the cancellation of a series of big ticket projects such as Northern Gateway, Pacific NorthWest LNG, Energy East as examples of investor sentiment being dented.
In its latest report, titled ‘Crude Oil Forecast, Markets and Transportation’, CAPP noted that despite the competitiveness gap, the country’s oil production is projected to 5.6 million barrels per day (mbpd) by 2035, mainly due to a rise in oil sands production to 4.2mbpd from 2.65mbpd.
In order to transport the growing production to emerging markets, CAPP urged the government to construct pipelines.
According to the report, Western Canada contributes around 95% of the country’s total production, and the liquids-rich Montney and Duvernay formations are expected to drive growth, with projected contribution of 500,000 barrels per day (b/d) of pentanes and condensates by 2026.
Oil production in Eastern Canada is expected to increase to 290,000b/d by 2025, with major contributions from offshore projects such as Hebron, Hibernia, Terra Nova, and White Rose.
Thereafter, regional production is anticipated to decline to 70,000b/d by 2035.
CAPP president and CEO Tim McMillan said: “It is difficult for Canadian producers to ensure fair market value for our natural resources without major pipelines or access to new, emerging markets in regions such as China, India and South East Asia.
“Canada is falling behind its competitors, losing the opportunity to supply the world with oil produced the Canadian way.
“The competition for capital investment in the global marketplace is fierce and Canada is losing. A lack of regulatory clarity, and the inability to see federally approved pipelines get built, sends the signal that Canada is closed for business.”
The body stated that Canada’s oil supply last year exceeded its existing available pipeline capacity as construction of Kinder Morgan’s Trans Mountain expansion pipeline, Enbridge’s Line 3, and TransCanada’s Keystone XL has not yet started.
