UPDATE 2-Canada oil output growth upgraded by 500,000 bpd
* Overall output 4.7 mln bpd by 2020, from 3 mln
* Oil sands production 3.1 mln bpd, from 1.6 mln
* W.Canadian conventional 1.3 mln from 1.1 mln
CALGARY, Alberta, June 5 (Reuters) - Canadian oil output is poised to surge ahead far faster than expected only a year ago, the industry's main lobby group said on Tu esday, boosting its forecast for 2020 production by half a million barrels a day.
Total output from the United States' top energy supplier is now expected to jump by 57 percent to 4.7 million barrels per day by the end of the decade due to a new boom in light oil from shale and other tight rock formations and from multibillion-dollar investments in oil sands projects, the Canadian Association of Petroleum Producers said in its closely watched annual outlook.
A year ago it said output would hit 4.2 million bpd.
Light crude from the Bakken region of Saskatchewan and similar formations in Alberta, coaxed to the surface with the aid of horizontal drilling and hydraulic rock fracturing, represents a surprisingly large part of the new projected gain, CAPP vice-president Greg Stringham said.
Light oil output had been waning steadily for more than a decade as fields matured and the Alberta oil sands played an increasingly dominant role in Canadian energy production.
CAPP now sees conventional light and heavy crude climbing to 1.3 million bpd in eight years from 1.1 million in 2011.
"We saw a little resurgence starting last year and it was so early we didn't want to go overboard, but that resurgence has continued and is much stronger this year. It's making up almost half of the growth we're seeing in 2020-2025," Stringham said.
Down the road, overall Canadian production is projected to increase to 5.6 million bpd by 2025 and 6.2 million by 2030.
Projected increases in the next few years have heightened the urgency for boosting pipeline capacity to export markets, he said. Ottawa seeks to streamline the regulatory process for advancing such projects through a controversial series of measures contained in a sweeping budget bill.
Without new or expanded lines, production could now bump up against available export capacity by as early as 2014-2015, CAPP said. That moves up the expectation by one to two years.
In the oil sands, the world's third-largest crude deposit, production could double to 3.1 million bpd by 2020, CAPP said -- about the same as current oil output from Iran, OPEC's No. 2 producer.
Some analysts have warned that a six-week, $20 slide that has cut U.S. benchmark crude oil to $84 a barrel, coupled with deepening discounts on Canadian oil due to tight pipeline capacity, could prompt some developers to defer projects.
On Monday, Wood Mackenzie released a report saying pure-play oil sands developers without hedges in place are most likely to cancel or delay project plans.
However, CAPP is not basing its outlook on the day-to-day gyrations in the oil market, Stringham said.
"In particular, when it comes to the oil sands, these are five- to seven-year construction periods and approval periods for projects, so while it is important as a signal it really won't change it unless it goes to levels much lower than this and stays there for a long period," he said.
CAPP said most production growth will go toward displacing imported crude supplies in Eastern Canada, reaching the U.S. Gulf Coast and getting shipped to Asian markets.
Several pipeline projects, including Enbridge's Inc's Line 9 reversal, TransCanada Corp's Keystone XL and Enbridge's Northern Gateway, are designed to get Canadian crude to those locations, though all face opposition from environmental groups.
"Timely regulatory decisions on new upstream development and infrastructure projects will enhance Canada's international competitiveness in attracting the investment needed to support this production growth and realize market opportunities, benefiting all Canadians," CAPP said in a statement.