Turn Me Loose – Will Crude Oil Pipeline Capacity Keep Up With Western Canadian Production Growth?

Several projects in the works would expand crude oil pipeline takeaway capacity out of the Western Canadian Sedimentary Basin (WCSB) to the U.S. and Canada’s west coast. But, given the pace of production growth in Alberta, will enough takeaway space come online in time to prevent pipeline capacity shortages and the price dislocations that come with them? That’s what we’ll be looking at in today’s RBN blog, the final episode in our seven-part series on WCSB crude oil supply, which also serves as a preview of our latest Drill Down Report.

Over the course of our series (and detailed in our new report), we've explored the forces reshaping Western Canada's crude oil market, from the rapid growth in WCSB production and its seasonal swings to the pipeline expansions that have enabled rising exports. We also examined how transportation constraints influence crude price discounts, traced the evolution of crude flows and end markets, reviewed proposed pipeline expansion projects, and assessed producers’ plans to increase oil sands output in the years ahead. Together, these trends highlight a market in which production growth, takeaway capacity and changing demand patterns will determine whether Western Canadian crude can continue expanding its reach into North American and global markets.

Today, we present our monthly forecasts through 2029 for WCSB crude oil production and exports. Then we’ll compare these export forecasts against expected pipeline takeaway capacity to see if Western Canada’s crude oil market might be at risk of pipeline capacity shortages in the next few years. In addition to the information we’ve gone over in this series, the forecasts we present here include predictions about the impact of future turnaround activity for each oil sands facility and refinery. These forecasts lean on our database of turnaround histories for each facility, and company guidance where available. 

Starting with our crude oil production forecasts, Figure 1 below shows monthly WCSB historical production by type from 2022 through this spring (solid lines) and our projections through 2029 (dashed lines). We expect continued production growth in non-upgraded oil sands (gray lines), other heavy oil (purple lines), and condensate and pentanes plus (orange lines), while we are forecasting fairly flat production for upgraded oil sands (green lines) and conventional light and medium oil (blue lines), albeit with month-to-month volatility and some year-to-year variability, primarily due to oil sands turnaround schedules.