CALGARY – The Conference Board of Canada says uncertainty over new pipeline projects poses a threat to Canadian companies that provide services to oil and gas producers.
The Ottawa-based think-tank predicts the sector’s real economic output this year will drop slightly by $60 million, or half a per cent, to $11.55 billion.
It says some of that is due to a lingering weakness in natural gas prices and a levelling off in conventional oil drilling.
But the board says the “bigger threat” is the lack of pipeline capacity, as environmental opposition and political wrangling throws the fates of projects such as Keystone XL into question.
The report says the current pipeline system will run out of room in the next few years, and delays in building new capacity could cause producers to pull back on their investment plans.
That would limit the need for support services such as drilling — a sector that represents nearly 112,000 jobs, just a bit less than the extraction industry itself.
A bullish forecast by the Canadian Association of Petroleum Producers earlier this month predicted a doubling in Canadian oil production by 2030, despite the pipeline delays, as alternatives such as rail transport fill the gap in the short term.