CALGARY, June 13, 2019 /CNW/ – 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.
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.
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.
Canadian Association of Petroleum Producers quotes: Tim McMillan, President and CEO
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The Canadian Association of Petroleum Producers (CAPP) represents companies, large and small, that explore for, develop and produce natural gas and oil throughout Canada. CAPP’s member companies produce about 80 per cent of Canada’s natural gas and oil. CAPP’s associate members provide a wide range of services that support the upstream oil and natural gas industry. Together CAPP’s members and associate members are an important part of a national industry with revenues from oil and natural gas production of about $101 billion a year. CAPP’s mission, on behalf of the Canadian upstream oil and natural gas industry, is to advocate for and enable economic competitiveness and safe, environmentally and socially responsible performance.