pipeline-oil

A pipeline capacity gap that is impeding the movement of Western Canada’s crude to market will close by 2021 and there will be surplus room from about 2022 until 2030, according to the Canadian Energy Research Institute.

The Enbridge Line 3 and Trans Mountain expansion pipeline are expected to come onstream in about two years, followed by the Keystone XL pipeline about a year later, the Calgary-based think-tank said Tuesday in a forecast based on financial and market modelling.

It predicts Canadian crude oil production will jump to 7.2 million barrels per day by 2038 from 4.2 million bpd last year, aided by thirsty markets that will drive global oil prices above US$100 per barrel by 2030.

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Oil production growth will come mainly from the oilsands, which will build from the current 2.65 million barrels per day to just under 5.5 million bpd by 2038, CERI says in its reference scenario.

“In all cases, we see increases in the production of oilsands because we see increasing demand for oil globally,” said CERI CEO Allan Fogwill.

“We see the market access issue being resolved and we also see improvements coming in the production of oilsands, helping reduce the cost.”

Its oil production forecast is higher than one released last week by the Canadian Association of Petroleum Producers, which predicted that Canadian oil output will increase to 5.6 million bpd by 2035 as oilsands production rises to 4.2 million bpd.

Emissions from the oilsands would exceed the Alberta government’s cap of 100 million tonnes of carbon dioxide per year by 2030 with current technology, Fogwill said, but added new technologies are expected to allow the industry to continue to grow without violating the cap.

CERI foresees a much darker future for natural gas than oil, with rising production from shale gas wells in the U.S. replacing western Canadian gas in its traditional markets of Eastern Canada, the eastern U.S. and, eventually, mid-continent U.S.

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Gas production will fall from current levels of about 16.5 billion cubic feet per day to about 15.4 bcf/d over the next two decades unless LNG export facilities are built to send gas to new markets overseas, Fogwill said.

About 14 liquefied natural gas processing facilities have been proposed for the West Coast but none are being built as yet. CERI calculates that two LNG terminals would add about five billion cf/d to demand for gas mainly from Alberta and B.C.

The picture for natural gas could get even worse if oilsands producers succeed in their goal of reducing the amount of gas they burn to create steam to produce bitumen, Fogwill said.

Originally published on Advisor.ca
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