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The coming startup of the Trans Mountain pipeline will help boost Canadian oil production to an all-time high within the next two years, according to a new report.
The report by Deloitte Canada said the extra capacity created by the currently ongoing pipeline expansion is expected to boost Canadian production by about 375,000 barrels a day over the next two years.
That represents an eight per cent increase from the previous production high set in November 2022, and a nearly nine per cent increase from the 4.18 million barrels per day (bpd) of oil that Canada produced in June of this year — the most recent month for which statistics are available through the Canadian Centre for Energy Information.
"The increase in volume is notable: it’s greater than the total amount added to Canada’s production levels over the past five years combined," the report said.
The Trans Mountain pipeline is Canada's only pipeline system transporting oil from Alberta to the West Coast.
Its expansion, which is currently underway, will boost the pipeline's capacity to 890,000 bpd from 300,000 bpd.
Much of these additional exports will go to markets outside the United States, allowing Canadian producers to reduce their dependence on U.S. refinery operations.
This, in turn, is expected to narrow the price discount Canadian bitumen producers typically receive for their product compared with higher-quality U.S. sweet crude.
According to the Deloitte report, the vast majority of the expected increase in Canadian oil production in the coming years will come from the oilsands, where companies are working on thermal expansion projects that will link new assets with existing facilities to speed up development at a lower cost.
Deloitte added that in spite of rising oil production in both Canada and the U.S., global crude prices will likely remain at elevated levels in 2024.
“The extra supply of North American crude will likely continue to be offset by voluntary supply cuts from some OPEC+ member countries, moderating any downward pressure on prices,” said Andrew Botterill, Deloitte Canada's national oil, gas and chemicals leader, in a release.
The Trans Mountain pipeline expansion is expected to be completed in early 2024.
The pipeline was purchased by the federal government in 2018 after its previous owner Kinder Morgan Canada Inc. threatened to scrap the expansion project in the face of environmentalist opposition and regulatory hurdles.
Proponents of the Trans Mountain pipeline expansion say improved market access for Canadian crude will help Canada's energy industry meet growing global demand for oil during a time when Russia's war in Ukraine has placed pressure on world energy markets.
Opponents say Canada cannot increase its oil output and still achieve the international commitments it has made on climate change and emissions reduction.