On April 14, attendees at the CERI 2014 Oil Conference in Calgary, Alberta, got some very encouraging news from a very reliable source, Beth Lau, manager of oil supply and markets with the Canadian Association of Petroleum Producers (CAPP). Lau gave the assembled crowd of oilmen and reporters a sneak-peak at CAPP's 2014 Crude Oil Forecast which will be released in early June.
The forecast predicts that the Canadian crude oil output is expected to reach 3.9 million barrels per day in 2015, an increase of 500,000 barrels per day over the current production level. That massive increase is equal to a little more than half of the daily production of the entire Bakken play in North Dakota.
Lau said that much of that increase will come from small-scale oil sands developments, each of which will deliver 35,000 to 45,000 barrels per day.
Some experts have suggested that 2015 will be a critical year for Canadian oil because it is unlikely that the new pipelines will be built that are needed to move oil from Western Canada and into the U.S. to link up with the Keystone XL network.
Canadian and North Dakota-based producers have placed orders for 40,000 new rail cars, but production has been slowed due to delayed release of new U.S. regulatory requirements. Each rail car can carry up to 600 barrels of crude but the sheer number of them that need to be constructed means they likely won't be available in significant quantities until late in 2015.
Both Enbridge and Kinder Morgan are in the process of creating improved pipeline access to Canada's West coast. That would be a real "game-changer" because that expanded access would promote the sale of Canadian crude to Asian markets, where it would sell at a premium. That would be in stark contrast to shipping it to the United States, as is currently the case for most of Canada's oil, where it trades at a discounted rate.