Oilsands output forecast pinched by pipeline uncertainty

Despite some recent breakthroughs, a lack of pipeline space continues to restrain production from Canada’s oil sands.

Those constraints were underscored on Tuesday when IHS Markit pared its projections for output from the world’s third-largest petroleum reserves over the coming years. The researcher forecast production of 2.8 million barrels a day this year, down 6.7 per cent from last year’s projection. Output in 2025 may be 3.5 million barrels, 2.8 per cent less than the firm’s forecast last year.

Enbridge Inc. and TransCanada Corp. have both received key approvals for major pipeline projects in the past year, and Canada’s federal government has agreed to buy Kinder Morgan Inc.’s Trans Mountain line to make sure the conduit’s expansion can overcome opposition in British Columbia. Yet those projects still face some uncertainties and won’t be providing pipeline space in the near term, said Kevin Birn, an executive director at IHS.

“The timing of the new pipelines will be key,” Birn said in a statement. “Even when greater certainty on infrastructure is achieved, it will take time for the impact of subsequent investment decisions to play out on production growth because of the lead time involved in oil-sands development.”

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