(Adds quote from CAPP vice-president, paragraphs 5 and 6))
By Nia Williams
CALGARY, Alberta, June 9 (Reuters) - The Canadian Association of Petroleum Producers (CAPP) cut its 2030 Canadian oil production forecast on Monday, citing growing uncertainty over the timing of development of some oil sands projects due to rising costs and lack of available capital.
In its annual forecast, the lobby group for the country's largest oil and gas companies, said total Canadian oil production would rise to 6.4 million barrels per day in 2030, compared with 3.5 million bpd in 2013.
That forecast was about 300,000 bpd, or 5 percent, lower than the one CAPP made last year.
The divergence comes from a lower forecast for production from projects in northern Alberta's oil sands, home to the world's third-largest crude reserves after Saudi Arabia and Venezuela.
"The capital cost of these projects has been going up year over year, and if that continues over the next decade, it's going to be extremely tough on their margins," said CAPP vice-president Greg Stringham.
"Not enough to necessarily cancel projects, but one of their coping mechanisms is to actually stretch these projects out."
Last week, Total SA said it was slowing design and engineering work on its C$11 billion ($10 billion) Joslyn oil sands mine in northern Alberta, citing cost pressures.
Up until 2020, CAPP's latest forecast is unchanged from last year's, with production from current projects and projects under construction seen as relatively firm.
Total Canadian production is expected to average 3.9 million barrels per day by 2015 and 4.9 million bpd by 2020, while oil sands output is seen at 2.3 million bpd next year and 3.2 million by bpd by 2020.
By 2030 oil sands output is now forecast to be around 400,000 bpd lower than the previous prediction of 5.2 million bpd. In 2013 output was 1.9 million bpd.
CAPP said the oil sands remain the primary driver of Canadian production growth, but conventional oil production was reversing its previous long decline due to horizontal and multi-fracturing drilling techniques.
Increased drilling in liquids-rich plays such as the Alberta Duvernay has boosted production of condensate, an ultra-light crude vital to oil sands producers used to dilute raw bitumen so it can flow through pipelines.
Western Canada is expected to produce 1.5 million bpd of conventional oil by 2030, versus 1.3 million bpd in 2013.
Meanwhile in Atlantic Canada, three recent offshore discoveries in the Flemish Pass Basin could lead to higher production forecasts for the region, CAPP said.
The report noted delays in TransCanada's Keystone XL pipeline project had pushed more crude onto rail cars, barges and tankers, even though pipelines remained the primary transportation option for Canadian crude.
"Connecting Canadian supplies to these markets, safely and competitively, remains a key priority for our industry," CAPP's Stringham said in a statement, which added that projected Canadian oil production growth depends on transportation capacity being expanded.
$1=$1.09 Canadian Additional reporting by Julie Gordon in Vancouver; Editing by Franklin Paul, Sofina Mirza-Reid and Peter Galloway