The Canadian oil industry and battered oil producers are facing a decade of diminishing production and slowing growth, which marks a significant reversal of an industry, which was once considered to be an economic juggernaut.
A major market forecast released on Tuesday sliced over one million barrels per day of forthcoming production from the industry’s growth trajectory and stated that investment levels are likely to drop by 40 per cent this year compared to a year ago. This has underscored major challenges facing companies that are already stirred by the prospect of environmental fees and increased royalties under the NDP government in Alberta.
The Canadian Association of Petroleum Producers represents the affiliates of major oil companies ConocoPhillips Co. and Exxon Mobil Corp. as well as Calgary based Cenovus Energy Inc. and Suncor Energy among others. The Canadian Association of Petroleum Producers, in its annual outlook, said that the gross Canadian oil production is likely to reach 5.3 million barrels per day by the year 2030.
This rose from 3.74 million barrels a year ago. However, the figure represents 17 per cent or 1.1 million barrels per day below expectations of last year. Investment in the oil sand, on the other hand, is anticipated to decline by a third from a year ago to reach US$23 billion. Growth rates according to the Canadian Association of Petroleum Producers will fall approximately by half over the next decade.
These figures represent a rather sudden shift in progress in northern Alberta after many years of intense growth, which brings into focus the shaky prospects for a sector that is fighting to stay alive amidst stiff competition from shale supplies from the United States, reduced commodity prices, and the threat of new costs brought into force in the form of increased carbon levies.