UPDATE 2-Canadian oil industry body cuts long-term production forecast

Mon Jun 9, 2014 4:19pm EDT
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(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.   Continued...