Canadian oil production will grow by 1.4% annually until 2035, the Canadian Association of Petroleum Producers (CAPP) forecast on Thursday, halving its forecast from five years ago due to constraints by lack of new pipelines and inefficient regulation.
The Calgary-based industry body said output will increase to 5.86 million barrels per day by 2035, a rise of 1.27 million bpd from current levels, representing a 1.4% annual increase. That growth rate is less than half what CAPP projected in its 2014 outlook.
Canada holds the world’s third-largest crude reserves but its oil and gas industry has struggled to recover from the 2014/15 global oil price crash.
CAPP also forecast capital investment in the Canadian oil and gas industry will fall to C$37 billion ($27.76 billion) in 2019, compared with C$81 billion in 2014.
Lengthy delays in getting new oil export pipelines built have led to congestion on existing pipelines and crude getting stranded in Canada’s main oil-producing province Alberta.
That pushed the discount on Canadian crude versus global benchmarks to record levels last year and prompted the Alberta government to impose oil production curtailments.
“Although the country’s overall crude oil production is expected to grow over the coming years, that growth forecast is significantly reduced from previous expectations,” CAPP said in a statement. “Pipeline constraints, a lack of market diversity, and inefficient regulations are largely responsible for holding back Canada’s oil sector.”
(Reporting by Nia Williams Editing by Phil Berlowitz Editing by Marguerita Choy)