Constrained growth outlook means a missed opportunity for Canada’s oil sector
June 14, 2019 By Canadian Association of Petroleum Producers
June 14, 2019, Calgary, Alta. – Canada’s oil sector is missing a significant opportunity to benefit from the global commodity price and finally receive fair market value for Canadian resources, according to the Canadian Association of Petroleum Producers’ (CAPP) 2019 Crude Oil Forecast, Markets and Transportation report.
The report shows a constrained outlook for Canadian oil production over the forecast period from 2019 to 2035 and, although the country’s overall crude oil production is expected to grow over the coming years, that growth forecast is significantly reduced from previous expectations. Pipeline constraints, a lack of market diversity, and inefficient regulations are largely responsible for holding back Canada’s oil sector.
CAPP projects Canadian crude oil production will increase by 1.27 million barrels per day (b/d) to 5.86 million b/d by 2035. This represents a 1.44 per cent annual increase, a growth rate less than half of what was projected in CAPP’s 2014 outlook.
“We need pipeline capacity and more efficient regulatory policy to help bring investment back to the oil sector and drive growth. CAPP has been vocal in its concerns about the challenges facing Canada’s energy industry and our forecast demonstrates the impact these challenges are having on the overall economy,” said Tim McMillan, CAPP president and CEO.
This year, capital spending in the oil sands is set to decline for a fifth consecutive year to roughly $12 billion, approximately one-third of the investment seen in 2014. Conventional oil producers are expected to drill fewer wells in 2019 compared to either of the two previous years, and activity is not likely to improve without better market access via pipelines
Overall, capital investment across Canada’s oil and natural gas industry is forecast to fall to $37 billion in 2019 compared to $81 billion in 2014. With global demand for crude oil expected to grow through to 2040, Canada has the opportunity to reclaim over $40 billion of investment if it addresses the key challenges surrounding access to international markets and regulatory and fiscal policy both federally and provincially.
“Canadians are being left on the sidelines while global demand for oil and natural gas is rapidly growing. We are positioned to be a leading supplier of the most responsibly produced oil and natural gas on the planet but our lack of pipelines and inefficient regulatory reality means that other suppliers, with lesser environmental and social standards, are taking our market share.”
If those challenges are not met, any meaningful increase in oil production will not be achievable, reducing potential growth in Canada’s gross domestic product (GDP), business investment, exports, and jobs.
CAPP’s Crude Oil Forecast, Markets and Transportation can be found here.
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