The group also increased its forecast for Canada's oil output in 2015, boosting it by 750,000 barrels a day to 4.6 million as billions of dollars in new projects aimed at exploiting the oil sands, one of the world's greatest reserves of petroleum, are completed.

Canada's oil sands contain an estimated 174 million barrels of petroleum, a resource second in size only to that of Saudi Arabia. With oil prices remaining at lofty levels, removing the tar-like bitumen from sand and refining it into synthetic oil yields enough profit that about C$100 billion (US$91 billion) is expected to be invested in the region over the next decade.

"This is not an area that's reserve constrained, technologically constrained or economically constrained," said Greg Stringham, vice-president, markets and fiscal policy at CAPP.

The forecast was raised after some companies announced increased spending on their oils sands reserves. EnCana Corp and Canadian Natural Resources Ltd both said last year that they plan to boost output from the region by a half-million barrels a day over the next decade and more. The two firms expect to spend a combined C$25 billion on their oil sands projects.

Yet as oil sands output grows, conventional oil reserves are becoming scarce, the association said. In decline since the late 1990s, current production of 1.1 million barrels a day, equal to the output of the oil sands, may fall half by 2020.

CAPP said its production forecast could be 800,000 barrels a day lower if refiners in Canada and the United States don't expand capacity to handle the new crude oil, or if adequate supplies of skilled labor aren't available to build the projects.