Canada energy group cuts oil output forecast as outlays drop

CALGARY (Bloomberg) -- The Canadian Association of Petroleum Producers (CAPP) cut its 2030 oil production forecast by 17% as capital expenditures slipped after crude prices tumbled.

The world’s third-biggest holder of crude reserves will produce 5.3 MMbpd, down from 6.4 million forecast a year ago, CAPP said. The organization cut its forecast after oil dropped to $42 a barrel this year from near $108 in June as the Organization of Petroleum Exporting Countries maintained quotas amid a surge of U.S. shale oil.

The drop has curtailed capital expenditure by oil and gas producers to C$45 billion ($36.5 billion) in 2015 from C$73 billion last year, CAPP said. Expenditure in the oil sands fell to C$23 billion this year from C$33 billion.

“Companies are reverting to expansion of existing projects,” said Greg Stringham, a vice president at the Canadian Association of Petroleum Producers. “As far as new projects, those are being deferred or delayed.”

Rigs drilling for oil in the country fell to a seasonal six-year low, Baker Hughes Inc. data show. Companies including Suncor Energy Inc. and Royal Dutch Shell Plc have canceled or delayed oil-sands expansion projects.

CAPP’s forecast is based on a survey of its members. It also predicted production will rise to 4.64 MMbpd by 2020 and 4.96 million by 2025 and oil sands output will grow to 4 MMbpd by 2030 from 2.3 million this year.

Western Canada’s conventional oil output is forecast to drop to 1.3 Mbpd by 2020 from 1.4 million now, Eastern Canada’s production will fall to 90,000 bpd from 220,000 this year.