An increasing competitiveness gap continues to impede Canada when it comes to attracting energy investment. The country’s inability to get major pipelines built, and create and implement efficient regulatory policies – along with the cancellation of a series of projects such as Northern Gateway, Pacific NorthWest LNG, Energy East – has eroded investor confidence in Canada’s energy sector.
Total Canadian oil production is expected to increase to 5.6 million b/d by 2035 – an increase of 1.4 million b/d compared to production in 2017. Bolstering the growth will be a rise in oil sands production to 4.2 million b/d from 2.65 million b/d – despite a decrease in oil sands’ capital spending for the fourth consecutive year.
Western Canada accounts for about 95 per cent of the country’s total production, with conventional oil – including pentanes and condensates – representing more than one million b/d of the region’s total. Through to 2035 conventional production will remain largely flat – rising to 1.33 million b/d from 1.32 million b/d in 2017. The greatest potential for growth will be in the liquids-rich Montney and Duvernay formations, which are expected to contribute about 500,000 b/d of pentanes and condensates by 2026.
In Eastern Canada, oil production will rise to 290,000 b/d by 2025 from major offshore projects including Hebron, Hibernia, Terra Nova, and White Rose. Hebron will account for the bulk of the production highs between now and 2025 as the region’s newest producing project ramps up. Beyond 2025, production will drop to 70,000 b/d by 2035.
Canadian oil producers continue to face pipeline constraints as federally-approved projects such as Kinder Morgan’s Trans Mountain expansion pipeline, Enbridge’s Line 3, and TransCanada’s Keystone XL have yet to begin construction. In 2017, Canada’s oil supply – comprised of oil production and diluent – was 4.2 million b/d, exceeding existing available pipeline capacity. CAPP forecasts oil supply will rise another two million b/d to 6.2 million b/d by 2035.
Meanwhile, the United States continues to aggressively streamline and reduce the costs associated with its regulations. Capital spending in the U.S. rose 38 per cent to $120 billion in 2017 while investment in Canada fell to $45 billion.
The 2018 Crude Oil Forecast, Markets and Transportation report can be downloaded at www.capp.ca/crudeoilforecast
Canadian Association of Petroleum Producers quotes: Tim McMillan, President and CEO
- “It is difficult for Canadian producers to ensure fair market value for our natural resources without major pipelines or access to new, emerging markets in regions such as China, India and Southeast Asia.”
- “Canada is falling behind its competitors, losing the opportunity to supply the world with oil produced the Canadian way. The U.S. is increasing its oil exports to the same emerging markets Canada is targeting.”
- “In 2014, production and capital investment was high in Canada’s oil industry. By removing regulatory barriers and increasing pipeline capacity, we can clear the path for a healthy energy sector and be successful once again.”
- “Canadian production is forecast to rise to 5.6 million b/d and yet we do not have the means of getting it to new, global markets.”
- “The competition for capital investment in the global marketplace is fierce and Canada is losing. A lack of regulatory clarity, and the inability to see federally-approved pipelines get built, sends the signal that Canada is closed for business.”
- The International Energy Agency estimates oil consumption will comprise 27 per cent of total world energy demand, or 105 million b/d, by 2040 – representing the largest share of any fuel source.
- Total energy demand is forecast to increase 30 per cent by 2040 from today’s levels, the equivalent of adding another China and India to current consumption, according to the IEA’s New Policies Scenario.
- About 99 per cent of Canada’s exports are shipped to the U.S., while less than one per cent is exported overseas.
- Between 2008 and 2017 the U.S. has increased oil production by 87 per cent and capital spending increased 38 per cent in 2017 to about $120 billion. In Canada, capital spending has declined 45 per cent between 2014 and 2017 to $45 billion.
The Canadian Association of Petroleum Producers (CAPP) represents companies, large and small, that explore for, develop and produce natural gas and crude oil throughout Canada. CAPP’s member companies produce about 80 per cent of Canada’s natural gas and crude oil. CAPP's associate members provide a wide range of services that support the upstream crude oil and natural gas industry. Together CAPP's members and associate members are an important part of a national industry with revenues from crude oil and natural gas production of about $110 billion a year. CAPP’s mission, on behalf of the Canadian upstream crude oil and natural gas industry, is to advocate for and enable economic competitiveness and safe, environmentally and socially responsible performance.
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