June 13, 2017 / 5:03 PM / 2 years ago

UPDATE 1-Canada oil industry raises growth forecast, calls for pipelines

(Adds details from statement, conference call and comment from drillers’ association)

June 13 (Reuters) - Canadian crude output will grow by a third to 5.1 million barrels per day (bpd) by 2030, even as capital spending drops for an industry beset by challenges, the country’s main oil lobby group said on Tuesday, raising predictions for the first time in four years.

The production rise comes mainly from the oil sands and is an increase of 32.5 percent from last year’s output of 3.85 million bpd and a 4 percent increase from last year’s forecast of 4.9 million bpd by 2030, the Canadian Association of Petroleum Producers (CAPP) said in an annual report.

The last time CAPP increased its forecast for 2030 was in 2013, when it predicted 6.7 million bpd of production, up from 6.2 million bpd predicted in 2012.

Such a boost in production highlights the need for pipelines for the largely landlocked industry, whose a lack of export routes depresses prices, CAPP said.

“We have been operating in a pipeline world where we have been at full capacity,” CAPP President Tim McMillan said in a conference call. “It’s like a freeway that’s always in gridlock.”

Canada has the world’s third-largest crude reserves, but bids to build new pipelines have faced fierce environmental opposition.

Major projects at various stages of approval include Enbridge Inc’s Line 3 replacement, Kinder Morgan Inc’s Trans Mountain expansion and TransCanada Corp’s Keystone XL and Energy East.

McMillan said the industry needs all of them.

Also on Tuesday, the Canadian Association of Oilwell Drilling Contractors forecasted 6,842 wells to be drilled this year, a 2,177 increase from its previous prediction, citing price stabilization.

The association, however, warned about delays in the Trans Mountain expansion’s coming online due to a vow to block it by the British Columbia province’s effective incoming government.

CAPP’s report, based on surveys of its members, said Canada’s oil industry faces challenges including uncertainty related to climate change policies, potential U.S. protectionist measures and possibly laxer regulations in the United States.

Capital spending in the Canadian oil sands is expected to decline for the third consecutive year to $15 billion in 2017, down from $34 billion in 2014, according to the report.

But the impact of the drop on investment in the oil patch, where project have years-long cycles, would not be seen until beyond 2020, when growth is expected to slow, McMillan said.

Production from oil sands in the Canadian province of Alberta, the heart of Canada’s energy sector, will reach 3.7 million bpd by 2030, CAPP said.

Reporting by Ahmed Farhatha in Bengaluru and Ethan Lou in Calgary, Alberta; Editing by Sai Sachin Ravikumar

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