* Oil troubles cut 0.4 point from second-half 2012 growth
* Bounce back should add 0.1 point to growth in 2013, 2014
* Smaller discount for Western Canada crude will help
* Also new pipeline, refining capacity to boost Canada
OTTAWA, Jan 23 A combination of temporary
disruptions in the energy patch and dramatic discounts for
Western Canadian crude oil sliced off 0.4 percentage point of
annualized economic growth in the second half of 2012, the Bank
of Canada estimated on Wednesday.
But things are looking better for 2013-14 and beyond, it
"The return to normal production and the gradual narrowing
of crude oil price spreads are projected to contribute 0.1
percentage point to real GDP growth in each of 2013 and 2014,"
the central bank said in its quarterly Monetary Policy Report.
It noted that in the second half of last year, regulatory
limits and shutdowns of the main Canada-U.S. pipelines
temporarily constrained crude transportation capacity. It added
that outages at big U.S. refineries reduced demand for Canadian
oil, while both Canadian oil sands and U.S. light oil production
grew without corresponding increases in pipeline capacity.
Lower Canadian crude prices and historically low natural gas
prices contributed to a fall in engineering investment, tied to
a decline in drilling activity.
And in the third quarter, unplanned oil sands maintenance
and outages off Newfoundland and Labrador cut crude oil output.
But things are looking brighter as the discount for Western
Canada Select (WCS) from West Texas Intermediate or Brent oil
"Over the next year, spreads for WCS are expected to narrow
gradually as the impact of temporary disruptions dissipates, new
pipeline capacity comes into service and new heavy crude oil
refining capacity is added," it said.
It pointed to increased capacity this month from the Seaway
Pipeline - a joint venture between Enterprise Products Partners
LP and Enbridge Inc - and the completion of the
TransCanada Gulf Coast project in the second half of
this year. Also, refurbishment of U.S. Midwest refineries would
increase the capacity for refining Canada's heavy crude, it
"This new transportation and refining capacity is expected
to drive the narrowing of the WCS spread over the medium term,"
it said, adding that further rail and pipeline additions would
help further in 2014.