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CALGARY — In the eyes of the energy sector, Fort McMurray, Alta., has never looked so promising.
The oil sands are entering a period of remarkable growth, doubling output in a decade – tripling in 15 years – and blowing past expectations from only 12 months ago, according to a sunny new industry forecast.
Recent months have seen the oil patch hit by waves of bad omens: industry leaders, concerned about unsustainable costs, have abandoned giddy growth targets. Efforts to sell oil sands properties have been abandoned, unfulfilled, amid buyer skepticism. Canadian oil prices have spiralled, then recovered – although worries remain about the value of Alberta crude.
The possibility of an expanded Alberta carbon tax threatens new costs. TransCanada Corp.’s Keystone XL project remains mired in a lengthy U.S. review; if it isn’t built, analysts say, billions of dollars of spending will vanish or slow and, with that, as much as one-third of near-term growth expectations.
But optimism ranks among Calgary’s most abundant commodities, and on Wednesday the Canadian Association of Petroleum Producers (CAPP) offered a far less dour view. In its annual outlook, a document that underpins the political and regulatory discussion about Canadian crude production, the industry group raised its projection of 2030 oil volumes by 500,000 barrels a day over its estimate a year ago.
By 2020, total Canadian oil output will surge by 50 per cent, according to CAPP, which projects it will more than double to 6.7 million barrels a day by 2030.
CAPP has slightly tempered its near-term oil sands outlook, saying 2014 and 2015 will see some 20,000 barrels a day less than previously expected, although overall Canadian oil output will be unaffected. And after those two years, production grows more quickly than earlier estimates.
The numbers make clear the stakes for Canada and Alberta in finding markets for oil, since the ability to pump new barrels is largely predicated on the ability to sell them.
Even with trains and the construction of every major pipeline project currently in public view – and some, including Enbridge Inc.’s Northern Gateway, are far from certain – industry will need more options by 2026, CAPP predicts.
“To enable this capacity, we will need a significant increase in capacity, which is above even the announced projects we have on the plate today,” said Greg Stringham, CAPP’s vice-president of markets and oil sands.
That places a substantial burden on pipeline companies, which must find ways to bury steel in places such as British Columbia, Nebraska and Quebec, where there is opposition to such plans.
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