Canada Oil and Gas Report Q4 2012
Business Monitor International, November 2012, Pages: 109
BMI View:
Production from oil sands will continue to drive Canada’s oil production growth. However,
exploration in the country’s offshore acreage and unconventional resources could prove-up more oil and gas reserves to support the country’s long-term growth prospects. The outlook for Canada’s oil and gas industry is still a rosy one, though its upstream potential needs more support from infrastructure development.
The main trends and developments we highlight for Canada’s oil and gas sector are:
- Production from oil sands shows no sign of abating. With major oil sands projects such as ConocoPhilips and Total’s Surmount and Total’s Joslyn North due to come online, and as Shell increases output at its Abathasca Oil Sands Project, oil sands output is set to remain strong and drive production in the next decade. A boom in tight oil production from the Bakken formation in Saskatchewan and similar formations in Alberta will contribute to this surge. We expect oil production to increase from an estimated 3.71mn barrels per day (b/d) in 2012 to 4.40mn b/d in 2016. By 2021, total oil production could hit 4.97mn b/d.
- Gas production will initially fall owing to declining conventional output – especially in Alberta and Saskatchewan – from an estimated 149.9bcm in 2011 to 148.7bcm in 2012. Thereafter, we expect a reverse in this trend as shale gas output growth, particularly from British Columbia,
outstrips conventional decline elsewhere in Canada. We have revised our forecast for gas production upwards, and project that it will increase to 157.0bcm in 2016 and reach 171.7bcm by 2021.
- While existing oil and gas reserves continue to deplete as fields mature, successes in unconventional and offshore exploration could prove-up reserves, posing an upside risk to our forecasts. In June 2012, Apache Corporation claimed that it made the world’s largest shale gas discovery in the Liard Basin, British Columbia, with recoverable natural gas estimates at 1.34trn cubic metres (tcm). Statoil also confirmed following a discovery at its Mizzen prospect, offshore Newfoundland, that it could hold 100-200mn barrels of oil equivalent (boe) of recoverable resources.
- Gas demand will rise as the proportion of gas increases in Canada’s energy mix. Consumption growth will also be propelled by the rising energy use at the oil sands facilities, as gas powers much of the oil sands production. Gas consumption is set to grow from 86.8bcm in 2012 to 97.2bcm in 2016. This upward trend will continue, with gas consumption expected to hit 112.6bcm by 2021.
- Asian companies such as Korea Gas Corporation (Kogas), Mitsubishi Corporation and PetroChina have been particularly interested in acquiring unconventional gas assets in Canada.
We expect Canada to continue receiving interest from Asian-based companies in gas assets and gas infrastructure. This view has played out, with Petronas launching a takeover bid for Canadian shale gas specialist Progress Energy in June 2012, and CNOOC seeking to acquire Canadian producer Nexen for US$15bn in July 2012.
- The abundance of gas production provides Canada with much export potential. Shell’s proposal for a 20.4bcm per year gas liquefaction and export facility in Kitimat, British Columbia is a step in the right direction in building up Canada’s export capabilities.
- Canada’s oil and gas infrastructure face bottlenecks that need to be addressed to move oil and gas more effectively across the country, and out of it. Otherwise, the country will be faced with the paradox of being over-supplied with oil and gas, but prevented from exporting these due to the supply shortages that exports could pose to the domestic consumption needs of particular regions of the country. However, strong environmental concerns will continue to hinder key projects such as the expansion of the TransMountain pipeline and Northern Gateway pipelines.
Planned LNG export terminals are likely to face similar regulatory obstacles.
At the time of writing, we assume an OPEC basket oil price for 2012 of US$107.05/bbl, a downward revision of our original forecast of US$111.47. This will fall to US$99.10/bbl in 2013 and US$93.15/bbl in 2014. Global GDP in 2012 is forecast at 2.03%, down from 2.46% in 2011, reflecting a faltering recovery in the US and an uncertainty with regard to the eurozone debt crisis. For 2013, growth is estimated at 2.32%.
BMI Industry View 7
SWOT Analysis 9
Canada Oil and Gas SWOT 9
Global Energy Market Outlook 10
Oil: Getting Closer To Emerging Markets Inflection Point 10
Table: Oil Consumption Forecasts, 2010-2016 (’000b/d) 12
Table: Oil Production Forecasts, 2010-2016 (’000b/d) 14
Regional Energy Market Outlook 19
Canada Energy Market Overview 25
Table: Canada – Upstream Projects 26
Industry Forecast Scenario 29
Table: Canada Oil & Gas – Historical Data And Forecasts, 2009-2016 29
Table: Canada Oil & Gas – Long-Term Forecasts, 2014-2021 30
Oil and Gas Reserves 31
Oil Supply And Demand 34
Gas Supply And Demand 35
LNG 36
Refining And Oil Products Trade 37
Revenues/Import Costs 38
Key Risks To our Forecast Scenario 39
Oil And Gas Infrastructure 40
Oil Refineries 40
Table: Downstream Projects Database 40
Service Stations 43
Oil Pipelines 43
LNG Terminals 45
Gas Pipelines 47
Regional and Country Risk/Reward Ratings 50
Developed States Oil & Gas Risk/Reward Ratings, Scores out of 100 50
Table: Developed Countries Upstream Risk/Reward Rating 54
Table: Developed Countries Downstream Risk/Reward Rating 54
Canada Upstream Rating – Overview 55
Canada Upstream Rating – Rewards 55
Canada Upstream Rating – Risks 55
Canada Downstream Rating – Overview 55
Competitive Landscape 56
Executive Summary 56
Table: Key Players – Canadian Oil And Gas Sector 58
Overview/State Role 58
Licensing and Regulation 59
Table: Key Upstream Players 62
Table: Key Downstream Players 63
Company Monitor 64
Suncor 64
Shell Canada 68
Encana 71
Cenovus Energy – Summary 74
Canadian Natural Resources – Summary 74
ConocoPhillips – Summary 75
Chevron – Summary 78
Devon Energy – Summary 79
Syncrude – Summary 80
BP Canada – Summary 80
Husky Energy – Summary 81
ExxonMobil – Summary 82
Statoil – Summary 84
Total – Summary 85
Murphy Oil – Summary 85
Enbridge – Summary 85
CNOOC/Nexen – Summary 86
Occidental Petroleum – Summary 87
TransCanada – Summary 87
UTS Energy – Summary 88
Gazprom – Summary 89
Ultramar – Summary 89
TAQA – Summary 90
Apache – Summary 90
Penn West – Summary 91
Talisman Energy – Summary 91
PetroChina – Summary 92
Korea National Oil Corporation (KNOC) – Summary 92
Petronas – Summary 93
North America – Regional Appendix 96
Table: Oil Consumption – Historical Data & Forecasts, 2009-2016 (’000b/d) 96
Table: Oil Consumption – Long-Term Forecasts, 2014-2021 (’000b/d) 96
Table: Oil Production – Historical Data & Forecasts, 2009-2016 (’000b/d) 96
Table: Oil Production – Long-Term Forecasts, 2014-2021 (’000b/d) 97
Table: Refining Capacity – Historical Data & Forecasts, 2009-2016 (’000b/d) 97
Table: Refining Capacity – Long-Term Forecasts, 2014-2021 (’000b/d) 97
Table: Gas Consumption – Historical Data & Forecasts, 2009-2016 (bcm) 97
Table: Gas Consumption – Long-Term Forecasts, 2014-2021 (bcm) 98
Table: Gas Production – Historical Data & Forecasts, 2009-2016 (bcm) 98
Table: Gas Production – Long-Term Forecasts, 2014-2021 (bcm) 98
Table: LNG Exports – Historical Data & Forecasts, 2009-2016 (bcm) 98
Table: LNG Exports – Long-Term Forecasts, 2014-2021 (bcm) 99
Methodology And Risks To Forecasts 100
Glossary Of Terms 101
Table: Glossary Of Terms 01
Oil And Gas Risk/Reward Ratings Methodology 103
Ratings Overview 03
Table: BMI’s Oil & Gas Business Environment Ratings – Structure 04
Indicators 04
Table: BMI’s Oil & Gas Upstream Ratings – Methodology 04
Table: BMI’s Oil & Gas Business Environment Downstream Ratings – Methodology 05
BMI Methodology 107
How We Generate Our Industry Forecasts 07
Energy Industry 07
Cross checks 08
Sources 08
Company Monitor
Suncor
Shell Canada
Encana
Cenovus Energy – Summary
Canadian Natural Resources – Summary
ConocoPhillips – Summary
Chevron – Summary
Devon Energy – Summary
Syncrude – Summary
BP Canada – Summary
Husky Energy – Summary
ExxonMobil – Summary
Statoil – Summary
Total – Summary
Murphy Oil – Summary
Enbridge – Summary
CNOOC/Nexen – Summary
Occidental Petroleum – Summary
TransCanada – Summary
UTS Energy – Summary
Gazprom – Summary
Ultramar – Summary
TAQA – Summary
Apache – Summary
Penn West – Summary
Talisman Energy – Summary
PetroChina – Summary
Korea National Oil Corporation (KNOC) – Summary
Petronas – Summary
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