As a data-driven organization, CAPP believes it is critical to provide the public with credible, clear and the most up to date information available. CAPP’s Data Centre is a central access hub for information and data related to the many facets of Canada’s upstream oil and natural gas sector.
S&P Global: Economic Impact Assessment of Canadian Conventional Oil and Gas
Summary of Canadian Imports of US Crude Natural Gas and Refined Products
- Parts of Canada are dependent on the US for imports of crude oil, natural gas, and refined products. This dependence poses a risk that Canadian retaliatory measures, such as export restrictions on US exports, could lead to similar actions from the United States, resulting in energy shortages and higher prices for Canadians. Regions across the country would be impacted.
- Ontario and Quebec are particularly vulnerable; about half of the natural gas they consume is imported from the United States. Additionally, Ontario and Quebec’s Montreal refinery depend entirely on crude oil delivered from the United States, with no immediate alternatives available. While there are options to deliver more Canadian natural gas via the Canadian Mainline, the pipeline would likely require capital investment to materially increase its flow rate. Line 9 could be reversed (once again) to provide some supply from offshore into Montreal and Ontario, but this cannot be done in the short term.
- Alberta imports over 200,000 barrels per day of light condensate to blend with heavy bitumen for transportation. A curtailment of these imports could increase costs for heavy oil producers and could cause operational issues that constrain production.
- British Columbia, Quebec, and Ontario also depend on refined product imports, with limited alternatives. Due to this integration, Canada must consider the potential for energy shortages if the US curtails its deliveries to Canada.
Summary of Canadian Exports of Crude Oil and Natural Gas
Crude Oil Export Highlights
- After meeting domestic refining needs in Western Canada and Ontario, almost all Canadian crude oil production is exported to the US. Historically, limited access to tidewater ports, specifically in Western Canada, has prevented oil from being sold abroad. For context, Canada exported roughly 80% of its total oil supply to the US in 2023.
- Canada is the US’ largest foreign crude oil supplier, making up ~60% of all US imports in 2023, equating to roughly 5X the next biggest supplier, Mexico. Canada’s dominant position is due to our trade history, geographic proximity, integrated pipeline infrastructure, and compatible heavy crude oil.
- A lack of new pipeline takeaway capacity in recent years has ultimately limited the export potential for Canadian crude oil. The Trans Mountain Expansion Project (TMEP) has increased Canadian oil exports to the US West Coast. TMEP will also present an opportunity to ship oil to Japan, India, and SE Asia.
Natural Gas Export Highlights
- The North American shale revolution has altered the natural gas supply/demand dynamic, turning Canada’s sole export market, the US, into its main competitor. In 2023, Canada exported roughly 45% of its natural gas supply to the US. From 2010 to 2021, natural gas exports to the US decreased by over 15% due to increased natural gas production in the northeast US, its main competitor.
- In Canada, tight gas plays in the Montney, Deep Basin, Duvernay, and other northwest Alberta and northeast BC areas offer significant development potential. Like oil, the growth of gas exports has been limited by pipeline constraints and the inability to tap into global markets via LNG.
- Compared to the other top natural gas-producing countries, Canada has significantly lagged in the growth of its natural gas exports. Beginning in 2025, LNG exports from Canada’s West Coast, via LNG Canada, will facilitate expansion into global markets.
Summary of Canadian Oil and Gas Production
Canada is a significant supplier of oil and gas. Canada is the fourth-largest producer of oil in the world and the fifth-largest producer of natural gas.
Natural Gas Highlights
- Competition from US shale gas starting in 2008 led to a decline in Canadian production. In 2012-13, the trend reversed with the discovery of shale gas in BC and Alberta. Canadian production has now recovered to a record high of 18.1 Bcf/d (YTD average in 2024)..
- Shale gas has also shifted the dominant location for natural gas production; from southern Alberta to northeast BC and northern Alberta.
Crude Oil Highlights
- Canadian oil production includes oil sands at 3.3 MMB/d (58%), conventional at 1.5 MMB/d (26%), east coast offshore at 0.2 MMB/d (4%) and NGLs at 0.7 MMB/d (12%).
- Since 2005, oil sands production has tripled, but after 2018, production growth has moderated. Production has ranged between 3.1 and 3.2 MMB/d in the last few years (2021, 2022, and 2023).
- Condensate and pentanes plus production has doubled since 2014 and averaged just over 500,000 B/d YTD in 2024. The growth of light liquids is a byproduct of the prolific shale gas and oil wells.
Summary of the Economic Impact of Canadian Oil and Gas
- Conditions for the Canadian upstream oil and gas industry have been challenging since the 2014/2015 downturn; however, the situation has drastically improved post-COVID with the commodity price recovery and improved pipeline takeaway capacity, which have resulted in record-high revenue levels in 2022 and 2023.
- Annual revenue for 2025 is now estimated lower at $177 billion (relative to 2024) due to weaker oil and gas prices. CAPEX spending is expected to be similar to 2024, with the equivalent of 60% of industry revenue, or $106 billion, estimated to be spent on operating expenditures (OPEX) and capital expenditures (CAPEX) combined; this is mostly spent in Canada.
- The industry’s improved health has transferred to the bottom line of provincial governments. The industry paid a record $34 billion in oil and gas royalties to provincial governments in 2022. In 2024 and 2025, over $20 billion is expected in each year.
- Over the past few years, cost inflation has erased some of the industry’s previous gains in reducing operating costs. Managing these costs continues to be an area of focus.
- The economic impact of Canada’s upstream oil and gas sector is significant. In 2023, the sector comprised over 3% of Canada’s total GDP. The Oil and Gas Extraction sub-industry is the largest goods-producing industry in Canada. It is 27% bigger than the next largest sub-industry—Engineering and Other Construction Activities—and 30% bigger than the Residential Building Construction industry.
- When direct, indirect, and induced jobs are considered, the oil and gas sector employs about 900,000 people in Canada. These are well-paying jobs; the average direct oil and gas worker’s total compensation is roughly 2X higher than the Canadian average for goods-producing industries.

Summary of Canadian Oil and Gas Export Infrastructure
Canada is both a significant consumer and supplier of energy. Substantial energy infrastructure has been developed over decades to gather, process, and ship energy to domestic and export markets.
Oil and Natural Gas Liquids Infrastructure Highlights
- There are more than 840,000 km of transmission, gathering, and distribution pipelines in Canada. The pipeline network delivers natural gas, natural gas liquids, and crude oil for domestic use and export.
- Canada has more than doubled its pipeline and rail flows out of the Western Canadian Sedimentary Basin (WCSB) to over 4.6 MMB/d (from ~2 MMB/d) since 2007 to accommodate oil sands growth, however, growth has ultimately been constrained due to limited egress capacity, including the cancellation of three major proposed pipeline projects.
- The Trans Mountain Expansion Project (TMEP), now complete, has added ~590 MB/d of egress capacity, marking a major milestone for Canadian oil producers and providing tidewater access to new markets.
Natural Gas Infrastructure Highlights
- A large network of pipelines moves natural gas from producing regions in Western Canada to Eastern Canada and the US, where Canada represents the largest foreign supplier.
- Starting in 2016/2017, constraints in regional gathering systems and export lines have limited growth and depressed prices, but recent capacity expansions have helped mitigate these issues. Canadian natural gas started to be exported from US LNG terminals in 2023. The first Canadian LNG export facilities are under construction and will provide greater access to higher-priced international markets.
Summary of Crude Oil Market Fundamentals
Global Crude Oil and Liquids Supply
- Based on the latest short-term forecasts (at the time of this publication) from the International Energy Agency (IEA) and the US Energy Information Administration (EIA), global crude oil and liquids supply is expected to average 104.5 MMB/d in 2025, up 1.8 MMB/d (+1.7%) from 2024. The IEA has released its 2026 forecast and is calling for global crude oil and liquids supply of 105.9 MMB/d, representing a 1.5 MMB/d increase relative to its 2025 forecast. In December 2024, OPEC+ announced an extension of its existing supply cuts of 3.7 MMB/d to the end of 2026. Its additional 2.2 MMB/d of voluntary supply cuts were also extended to the end of September 2026 and will be gradually phased out every month commencing in April 2025.
Global Crude Oil and Liquids Demand
- Based on the average of the January 2025 short-term outlooks from the IEA, EIA, and OPEC, global crude oil and liquids demand is expected to average 104.4 MMB/d in 2025, up 1.3 MMB/d Y/Y (+1.3%).
Global Crude Oil and Liquids Supply/Demand Balance
- Based on the latest monthly IEA Oil Market Report (Jan 2025), a supply surplus is expected in 2025 as demand growth in 2025 is expected to accelerate from 2024, driven by a marginally improved economic outlook. However, non-OPEC+ supply from the US, Brazil, Guyana, and Canada is expected to exceed demand growth.
- In 2024, price volatility amplified amidst increased geopolitical tensions in the Middle East and the threat of slowing demand growth. WTI has strengthened to begin 2025 driven by increased sanctions on Russian oil from the US. Looking ahead, based on the futures market, the average price for WTI in 2025 is roughly US$75/B.
WCSB Supply and Egress
- The amount of egress capacity out of the Western Canadian Sedimentary Basin (WCSB) influences Canadian crude oil prices. The Trans Mountain Expansion Project (TMEP) reached commercial operation in May 2024, adding 590 MB/d of pipeline export capacity, which has had a positive impact on Canadian crude oil differentials.
Summary of Canadian Consumption of Domestically Produced Crude Oil and Natural Gas
Canada consumes a mix of domestic production and imports for both crude oil and natural gas, with the US being the dominant foreign supplier. Canada and the US are highly integrated with supply delivered through a complex pipeline network that intertwines both countries.
Crude Oil Consumption Highlights
- In 2023, approximately 1.26 MMB/d of Canadian refinery crude oil receipts were domestically sourced, equating to 73% of total refinery receipts.
- Canada’s reliance on crude oil imports to meet refinery needs has declined by roughly 50% to ~0.46 MMB/d in 2023 since peaking at ~0.93 MMB/d in 2004. This is primarily a function of the closures of import-dependent refineries in Eastern Canada, but also due to pipeline changes that have improved connectivity to domestic sources.
- Canada’s refining complex is predominantly designed to process lighter-grade crude oils. Consequently, Canada’s heavy oil sands barrels are mostly exported to complex coking refineries in the US.
Natural Gas Consumption Highlights
- According to the latest Statistics Canada data, in 2023, Canadian natural gas demand was ~13 Bcf/d. Net of natural gas imports, the implied consumption of domestically produced natural gas was 10.1 Bcf/d or ~78% of total demand.
- The industrial sector is Canada’s largest natural gas consumer, accounting for ~7 Bcf/d or 53% of total demand in 2023.
- Provinces in Western Canada meet demand needs with domestic production. However, changes in North American supply/demand dynamics have led to an increased reliance on US natural gas imports for Eastern Canada and a loss in market share for Canadian gas producers in this region.