Canadian total oil production expected to rise by a third by 2035

Driven bygrowth in Alberta's oilsands,Canada's total oil production should increase to 5.6 million barrels per day by 2035 a 33 per cent increase over 2017 levels, according to a new industry forecast.

But the report by the Canadian Association of Petroleum Producers (CAPP) also says that the country needs to become more competitive and build more pipelines if it wants to get that oil to new markets.

"We don't build freeways for traffic jams, we build them to have efficient flow of traffic," CAPPpresident Tim McMillan told reportersfollowing his presentation at the Global Petroleum Show in Calgary on Tuesday.

"We should be looking at how do we reach the most profitable markets in the most efficient way possible and build the infrastructure to meet that need."

Western Canada production is forecast to account for the bulk of the country's total production, about 95 per cent.

CAPP's new report says the rise in the Canadian totals is expected to be drivenlargely by anincrease in oilsands production to 4.2 million b/d from 2.7million b/deven witha decrease in capital spending in the oilsands for the fourth consecutive year.

But CAPPforecasts conventional production through 2035 will remain flat in Western Canada rising to 1.33 million b/d from 1.32 million b/d in 2017.

The industry group identified the greatest potential for growth in theMontney and Duvernay formations in the Western Canadian Sedimentary Basin, which are expected to add about 500,000 b/d of pentanes and condensates by 2026.

It's a different picture in Eastern Canada.

Oil production in theregion is expected to rise to 290,000 b/d by 2025 from major offshore projects including Hebron, Hibernia, Terra Nova, and White Rose.Hebronwill account for the bulk of the production highs over the period.

But, beyond 2025, production will drop to 70,000 b/d by 2035.

"When we look at Eastern Canada, we look at projects which are currently producing or those that are under construction or those that are approved," McMillan said later.

"We can't factor in those that are still in development."

CAPP's report again raisedconcerns about Canadian competitiveness, echoing remarks made earlier this year.

The group says the struggle toget major pipelines built,the country's regulatory policies, and uncertainty related to provincial and federal climate change policies, as well as a series of cancelled projects,havehad a negative impact on investor confidence in Canada's energy sector.

"Canada needs to improve its competitiveness and get pipelines built if it wants to transport an additional 1.5 million barrels per day (b/d) of oilsands production growth by 2035 to new emerging markets," the reportsays.

"A lack of competitiveness continues to be one of Canada's biggest impediments when it comes to attracting foreign investment."

However, McMillantold an audience at the Global Petroleum Show that he supports the steps that the federal government took to push ahead development of theTrans Mountain pipeline expansion.

McMillan said Canada not only needs the Trans Mountain expansion but alsoEnbridge's Line 3 replacement and TransCanada's Keystone XL if it wants to succeed as a global supplier.

He said the U.S. is an important customer but added that Canada needs to think globally, too.

"The U.S. has growing supplies that they are self-sufficient on gas already and are looking to be self-sufficient on oil in the next decade," McMillan said.

"Today, Canada only has one customer for crude oil, and growing markets around the world want Canadian product so, you know, there's just a natural incentive for us to be building to new markets."