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Canada Oil and Gas Report Q1 2012
Business Monitor International, Jan 2012, Pages: 81
Business Monitor International's Canada Oil and Gas Report provides industry professionals and strategists, corporate analysts, oil and gas associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Canada's oil and gas industry.
BMI View: Oil sands-based liquids supply and shale gas production form the foundation of Canada’s energy supply outlook. Conventional sources of crude oil and natural gas output are in decline, with little immediate prospect of a reversal in this trend. The overall picture is therefore complex but encouraging, as long-term volumes of oil and gas protect Canada’s position as a key supplier to the US.
Main trends and developments we highlight for Canada’s Oil and Gas sector are:
- There is likely to be a threefold increase in gas power generation over the next decade, according to the Canadian Energy Research Institute. Much of the gas use in power applications is the result of rising energy use at the oil sands facilities. The greater use of gas in power generation projects points to Canada’s consumption rising from an estimated 92.1bn cubic metres (bcm) in 2011 to 105.8bcm by 2016 – when gas production is likely to be around 153.0bcm, including shale/coal bed methane (CBM) volumes.
- Driven largely by the needs of the oil sands industry, Canadian gas demand could rise by an average of 2.3% per annum, with the consensus view among industry forecasters suggesting consumption of at least 110bcm by 2020. More than 19bcm of the 48bcm rise in volumes will be due to oil sands requirements. Other power generation applications could consume 4-5bcm more gas over the next ten years. BMI is predicting Canadian gas demand of 119.5bcm by 2021.
- The consensus view appears to be that overall Canadian gas production will be largely unchanged from the current level by 2020, but with the increasing risk of an appreciable decline over the next two or three years, before non-conventional supplies reverse this trend and lead to the stabilisation of supply. BMI is assuming that estimated 2011 Canadian gas production of 161bcm will have dropped to 150bcm by 2014, but will then recover to 153bcm by 2016 and climb to 168bcm by 2021.
- Industry body the Canadian Association of Petroleum Producers (CAPP) continues to forecast significant growth in Canadian crude oil production, driven largely by oil sands. Released in June 2011, its forecasts reaffirm a trend for continued long-term output growth. Total Canadian production, including oil sands, is predicted to rise from 2.8mn barrels per day (b/d) in 2010 to 3.5mn b/d by 2015, and further to 4.2mn b/d by 2020 and 4.7mn b/d by 2025. The oil sands element is clearly critical, with volumes forecast to rise from 1.5mn b/d in 2010 to 3.7mn b/d by 2025, implying conventional oil output down to just 1.0mn b/d.
- Canadian total oil supply in 2011 was an estimated 3.38mn b/d, with little if any further expansion expected in 2012. Overall Canadian liquids production is now forecast by BMI at 3.69mn b/d by 2016. We are assuming that oil demand will reach 2.48mn b/d by 2016, providing net exports of 1.21mn b/d.
At time of writing, we assume an OPEC basket oil price for 2011 of US$101.90 per barrel (bbl), falling to US$99.40/bbl in 2012. Global GDP in 2011 is forecast at 3.2%, down from 4.3% in 2010, reflecting slowing growth in China, a faltering recovery in the US and a worsening eurozone debt crisis. For 2012, growth is put at 3.6%.
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