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Canada Oil and Gas Report Q4 2011
Business Monitor International, Sep 2011, Pages: 89
The latest Canada Oil & Gas Report from BMI forecasts that the country will account for 10.83% of North American regional oil demand by 2015, while contributing 27.99% to supply. In North America, overall oil consumption will have reached an estimated 21.53mn barrels per day (b/d) in 2011. It is set to rise to 22.49mn b/d by 2015. In the meantime, supply will average an estimated 12.01mn b/d in 2011 and could climb to 12.91mn b/d by 2015, thanks largely to biofuels and production from Canada’s oil sands projects offsetting the conventional oil decline in Canada and the US. Net imports for the region should be 9.58mn b/d in 2015 – up from an estimated 9.52mn b/d in 2011.
In terms of natural gas, the North American region will have consumed an estimated 767bn cubic metres (bcm) in 2011, with demand of 846bcm targeted for 2015, representing 10.4% growth. Production of an estimated 945cm in 2011 is set to rise to 1,019bcm in 2015. Canada’s share of gas consumption in 2011 will have been an estimated 12.02%, while it will have contributed 17.57% to regional production. By 2015, its share of gas consumption is forecast to be 12.42%, with 15.61% of regional supply.
Global GDP growth in 2011 is forecast at 3.6%, down from 4.3% in 2010. Growth in both the US and Eurozone should be marginally higher than last year, while Chinese economic expansion will slow and Japan’s growth will be 1.65%, reflecting the devastating earthquake and tsunami in March 2011. Our oil price assumption for 2011 is US$101.90/bbl for the OPEC basket, falling to US$97.50/bbl in 2012.
BMI assumes that Canadian real GDP will rise by 2.92% in 2011. We are forecasting 2.83% average annual growth in 2011-2015. The country’s oil demand is expected to average 2.28mn b/d in 2011, before rising to 2.44mn b/d by 2015. Total oil output looks set to reach 3.62mn b/d by 2015, subject to the pace of oil sands development. Gas demand of an estimated 92.1bcm in 2011 should reach 105.1bcm by 2015, while production is set to decline from 166.0bcm to 159.0bcm.
Between 2011 and 2020, we are forecasting an increase in Canadian oil production of 32.4%, with output rising steadily from an estimated 3.38mn b/d in 2011 to 4.06mn b/d at the end of the 10-year forecast period. Given that oil consumption is forecast to increase by 16.1%, exports should rise from an estimated 1.11mn b/d to 1.42mn b/d during the forecast period. Gas production (including shale gas and coal bed methane) is set to fall steadily while demand is forecast to rise 32.4%, leaving end-period net exports of 16bcm. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
According to BMI’s country risk team, Canada’s long-term political risk score is 94.2, compared with the Developed Markets average of 87.8 and the global average of 62.9. Our long-term economic rating for the country is 71.8, above both the Developed Markets average of 67.2 and the global average of 52.9. Canada has a privatised energy sector that boasts a large, competitive upstream oil and gas segment featuring domestic independents and integrated companies, plus direct and indirect participation by international oil companies (IOCs). The downstream segment is shared by IOC-controlled domestic companies and former state company Petro-Canada, which Suncor acquired in 2009.
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