CALGARY, Alberta (Reuters) - Canadian oil production will grow by 1.4% annually until 2035, the Canadian Association of Petroleum Producers (CAPP) forecast on Thursday, halving its estimate from five years ago due to constraints by a 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 2014.
Even so, it is higher than CAPP’s forecast last year, which said Canadian oil production would reach 5.6 million barrels by 2035. Most of the growth comes from thermal oil sands projects in northern Alberta.
Canada holds the world’s third-largest crude reserves but its energy industry has struggled to recover from the 2014/15 global oil price crash.
CAPP forecast capital investment in the Canadian oil and gas industry would fall to C$37 billion ($27.76 billion) in 2019, compared with C$81 billion in 2014.
Lengthy delays in getting new 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.
“We need pipeline capacity and more efficient regulatory policy to help bring investment back to the oil sector and drive growth,” CAPP Chief Executive Tim McMillan said in a statement.
CAPP compared the constrained growth outlook in Canada to a larger-than-expected increase in U.S. oil production, which the Energy Information Administration said will hit 13 million bpd by the end of 2019.
CAPP’s forecast comes amid close scrutiny of the Canadian government’s treatment of the energy industry.
On Wednesday, Canada’s Liberal government rejected the majority of amendments that would have diluted a bill designed to overhaul environmental assessments for major projects like pipelines, disappointing many in the energy industry.
“There is a simple reason why Canada is losing ground to the United States and that is market access and absent leadership,” said Mark Scholz, chief executive of the Canadian Association of Oilwell Drilling Contractors said on Thursday.
Next week, the federal government will decide whether to approve the Trans Mountain pipeline expansion, which was delayed after a Canadian court overturned the government’s 2016 approval of the project. Trans Mountain will nearly treble the volume of crude shipped from Alberta to the British Columbia coast.
Reporting by Nia Williams; Editing by Phil Berlowitz; Editing by Marguerita Choy and Bernadette Baum