June 23, 2016 / 5:42 PM / in a year

UPDATE 1-Canada oil output to jump 28 pct by 2030, transport an issue - industry

(Adds interview with association head)

By Catherine Ngai

CALGARY, June 23 (Reuters) - Oil output from Canada’s vast reserves is set to outpace infrastructure to bring that crude to market in coming years, the Canadian Association of Petroleum Producers (CAPP) said on Thursday, even as it scaled back its long-term growth forecast.

The industry group representing Canada’s oil and natural gas producers predicted in its annual growth forecast that output will grow by 28 percent to 4.9 million barrels per day (bpd) by 2030.

This was lower than their previous forecast of 5.3 million bpd by 2030 made a year ago. The lowered expectation comes amid a two-year rout in global oil prices that has hammered Canadian oil companies which have slashed billions in capital spending.

CAPP noted that Canada’s pipeline network has capacity to move some 4 million bpd, fairly close to the 2015 average supply of 3.98 million bpd.

While the majority of that oil moves south into the U.S. market, feeding refineries across the Midwest and U.S. Gulf Coast, the need for new infrastructure comes at a time when Asian demand is also rising, according to Tim McMillan, president and chief executive of CAPP.

“If you look at the global picture, forecasts are showing that growth in the world isn’t necessarily coming from our traditional customer in the U.S. It’s going to be India and China,” he said in an interview.

“Canada has great trading relationships with different countries already and energy is a big export. This is a priority,” he said.

Canada’s energy industry has long advocated for pipelines that would bring land-locked oil sands crude to its coast, allowing them to be shipped on to Asian markets.

But projects proposed by TransCanada Corp, Enbridge Inc and Kinder Morgan Inc have all faced opposition from environmentalists concerned about the likelihood these pipelines would spur development of Alberta’s carbon-intensive oil sands.

U.S. President Barack Obama rejected TransCanada’s Keystone XL pipeline from Canada last year, citing the impact it could have on climate change.

Production from Alberta’s oil sands, the world’s third-largest crude reserves and No. 1 source of U.S. oil imports, will hit 3.7 million bpd by 2030, CAPP said.

The industry group expects conventional oil production in Western Canada, including condensates, to fall to 1.1 million bpd by 2018 from 1.3 million bpd in 2015. Production is expected to remain relatively stable to 2030. (Additional reporting by Arathy S Nair in Bengaluru; Editing by Anil D‘Silva and Bernadette Baum)

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