The Wo­ken Gi­ant

Alberta Oil - - REPORT ON THE U.S. -

IT WOULD BE DIF­FI­CULT TO PIN­POINT

a five-year trend in the en­ergy sec­tor more mon­u­men­tal than the U.S. oil boom. The in­crease in U.S. shale pro­duc­tion over the past few years boosted to­tal out­put from an av­er­age 5.6 mil­lion bar­rels per day (bpd) in Septem­ber 2011 to 9.4 mil­lion bpd four years later and came on­line so quickly that it broke his­tor­i­cal records for growth and shifted the global oil mar­ket. The re­sults, as we know, are be­ing felt by all play­ers through­out the in­ter­na­tional mar­ket – par­tic­u­larly in Canada, where we de­pend al­most solely on the U.S. for oil ex­ports. What was once a ques­tion of meet­ing de­mand is now a ques­tion of man­ag­ing a sur­plus of sup­ply.

De­spite the slow­ing shale oil pro­duc­tion in 2015, Amer­ica’s rich­est shale plays are hold­ing (rel­a­tively) strong. En­cana’s re­cent di­vest­ment of shale as­sets in Colorado and Louisiana in fa­vor of its as­sets in the Per­mian Basin, Ea­gle Ford, and other plays is a small in­di­ca­tion of a larger trend as Cana­dian pro­duc­ers and ser­vice com­pa­nies in­creas­ingly tar­get Texas. The com­par­a­tively low costs of pro­duc­tion in the U.S., par­tic­u­larly in Texas, are slowly el­bow­ing out com­peti­tors fo­cused on Canada.

Of course, Canada-U.S. re­la­tions have also been in­flu­enced by en­ergy in re­cent years. Pres­i­dent Barack Obama shot down Tran­sCanada’s pro­posed Keystone XL pipe­line on the grounds that Al­berta’s oil sands pose a height­ened en­vi­ron­men­tal risk be­cause of its rel­a­tive car­bon in­ten­sity. Mean­while, emis­sions in re­gions like the U.S. por­tion of the Bakken go largely unchecked, with lit­tle speci­ficity around how much car­bon and methane is ac­tu­ally be­ing emit­ted, as this re­port will point out. Per­haps now as much as any time in the past, Canada’s en­ergy in­dus­try is at the mercy of its neigh­bor to the south, a sleep­ing gi­ant no more.

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