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CAPP Crude Oil Forecast: Oil Sands Development Drives Steady Canadian Oil Production Growth to 2030

CALGARY, ALBERTA -- (Marketwired) -- 06/09/14 -- Canadian oil production is projected to grow steadily by an annual average of four per cent or 175,000 barrels per day over the period to 2030 as companies continue to develop the oil sands in response to strong demand indications from North American and global energy markets.

According to CAPP's 2014 Crude Oil Forecast, Markets and Transportation, total Canadian crude oil production will increase to 6.4 million barrels per day by 2030 from 3.5 million barrels per day in 2013.

"Global demand for oil continues to increase and Canada's large reserves make it an attractive supply source for markets in the United States and beyond," said CAPP vice-president Greg Stringham. "Connecting Canadian supplies to these markets, safely and competitively, remains a key priority for our industry."

                 Canadian Crude Oil Production (million b/d)

                                        2013    2015    2020    2025    2030

Western Canada                           3.2     3.7     4.6     5.6     6.4
  Conventional                           1.3     1.4     1.5     1.5     1.5
  Oil Sands                              1.9     2.3     3.2     4.1     4.8

Eastern Canada                           0.2     0.2     0.3     0.2     0.1
Total (i)                                3.5     3.9     4.9     5.7     6.4
(i)Totals may not add due to rounding

As oil production increases, more transportation capacity is required to transport products to new and existing markets. Several projects are at various stages in the regulatory process and others are being considered. They include pipelines to the east and west in Canada and south to the United States. The projected growth in production is dependent on expansion of transportation capacity to a portfolio of market opportunities.

While pipelines remain the primary transportation mode for large crude oil volumes over long periods of time, delay in the regulatory process for Keystone XL has provided the impetus for additional capacity from railways, barges, and tankers in the transportation mix. With the construction of new loading and unloading facilities, existing rail lines provide flexibility to deliver to multiple destinations.

Over the full forecast period to 2030, oil sands remain the primary growth driver with production growth to 4.8 million barrels per day. Conventional oil production in Western Canada, including condensates, remains stable at 1.5 million barrels per day and Eastern Canadian offshore production declines to about 90,000 barrels per day.

Conventional oil production continues to reverse its previous long decline because of the continuing use of horizontal and multi-fracturing drilling techniques. Increased drilling in liquids-rich areas has also reversed a declining production trend for condensates, a light oil often used as diluent in the oil sands. In Eastern Canada, three recent discoveries in the Flemish Pass Basin may lead to increased projections for the region in future CAPP forecasts.

For comparison, CAPP's 2013 forecast estimated total production in 2030 at 6.7 million barrels per day, oil sands production at 5.2 million barrels per day, and conventional production at 1.4 million barrels per day. During the early part of the forecast period the two forecasts are very similar, with production from current projects and projects under construction being relatively firm. However, the latter part of the forecast is more dependent on new growth projects. While the overall trends in the two forecasts are consistent , the difference between the two forecasts later in the period primarily reflects increasing uncertainty regarding project timing related to cost competitiveness and capital availability. These impacts are more evident in proposed oil sands projects near the end of the forecast period.

CAPP's annual forecast is developed from oil producer survey data and CAPP analysis of historical trends, expected drilling activity, recent announcements and ongoing discussions with industry stakeholders and government agencies. CAPP does not forecast oil prices. The full report is available at www.capp.ca/forecast.

The Canadian Association of Petroleum Producers (CAPP) represents companies, large and small, that explore for, develop and produce natural gas and crude oil throughout Canada. CAPP's member companies produce about 90 per cent of Canada's natural gas and crude oil. CAPP's associate members provide a wide range of services that support the upstream crude oil and natural gas industry. Together CAPP's members and associate members are an important part of a national industry with revenues of about $110 billion a year. CAPP's vision is to enhance Canada's prosperity by enabling responsible growth of Canada's upstream oil and gas industry.

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