Bottlenecks expected as more Canadian oil meets tight pipe space

Calgary, Alberta

DEEPLY-DISCOUNTED prices for heavy crude from the heart of Alberta's oil sands look set to sink further, thanks to hundreds of thousands of barrels of new supply that will have difficulty finding space in crowded pipelines, traders say.

It would be another hit for Canada's ailing oil sands producers, who have slashed millions in capital expenditures and been forced to lay off thousands of workers over the two-year downturn in oil prices.

Until recently, pipeline space in Alberta has not been an issue as May wildfires took about half of the oil sands' production capacity offline. But most of that production is now back, and more bitumen is set to come online in late 2016 and early 2017, w…