CALGARY, Alberta, June 28 (UPI) -- Canadian crude oil production expands through the middle of the next decade, but it will do so through growth of mostly legacy projects, analysis finds.
"We expect oil sands producers to focus future investments in the coming years onto their most economic projects, which we expect to be expansions of existing facilities," Kevin Birn, an oil sands analyst with consultant firm IHS, said in a statement.
Lower crude oil prices, down about 50 percent from levels just two years ago, leave energy companies with less capital to invest in new exploration and production projects. North American production in general has slowed as a result, with U.S. oil production waning from inland shale basins.
For Canada, IHS expects production from the heavier oil sands found mostly in Alberta to grow by about 1 million barrels per day by 2025, which is significant enough to keep Canada at the top in terms of global producers, though lower than historical levels.
Canada is the top oil exporter to the United States and, with more than 170 billion barrels of proven reserves, holds the third largest reserves in the world.
An annual report from the Canadian Association of Petroleum Producers found heavier oil like that found in Alberta will yield about 3.9 million bpd by 2030, about 7.5 percent less than its forecast last year. Even for conventional oil production in the western part of the country, a short-term 15 percent decline is expected by 2018.
IHS said future growth in Canadian oil production will come mostly from projects on the books before the price of oil started to collapse last year. More than 75 percent of the growth to 2020 comes from these legacy projects, which Birn said makes better economic sense.
"Expansions of existing facilities are better understood, quicker to first oil and lower cost to construct," he said. "It is less risk at a lower cost."