Canada Set to Add Nearly 600,000 Bpd to Oil Supply Next Year
Global consulting firm Deloitte has predicted that Canadian oil producers will enjoy higher crude prices next year when the TMX pipeline begins transporting about 590,000 bbl/d for export.
A large chunk of these additional exports is expected to go to markets outside the United States, thus allowing Canadian producers to lower their dependence on U.S. refineries and narrow the WCS price differential.
“The extra capacity created by the TMX pipeline is expected to boost Canadian production by about 375,000 barrels a day over the next two years. That’s more than the total amount added over the last five years,” Deloitte Canada’s Andrew Botterill said in an October 4 report.
Deloitte also noted that this extra North American crude supply is set to be offset by continued voluntary supply cuts from OPEC+, which would ease downward pressure on oil prices.
“We saw the same thing happen this summer, when oil prices surged even as U.S. production volumes recovered to near pre-pandemic levels and exports rose from Iran and Venezuela,” Botterill said.
A lack of pipelines and persistent environmental concerns have hampered the Canadian heavy crude sector for years, with some companies exiting after coming under pressure to invest in projects with lower emissions.
However, Alberta has no plans to abandon fossil fuels any time soon, with Alberta premier Danielle Smith recently declaring that the energy rich region will transition away from emissions, not oil.
“We’re transitioning away from emissions; we’re not transitioning away from oil and gas. We’re not going to phase out production of oil and natural gas, we’re just going to change the way in which we use it,” Smith has said at the World Petroleum Congress in Calgary, Alberta.
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According to Smith, hydrogen from natural gas will likely become an increasingly important fuel in the province while carbon capture, utilization and storage (CCUS) will play a role in cleaning up emissions.
Smith has differed radically with Canada’s minister of energy and natural resources Jonathan Wilkinson who the previous day had supported IEA’s prediction that world oil demand will fall to just 25 million barrels per day by 2050, or a quarter of current global demand, an assertion Smith has dismissed as ‘ludicrous’.
