Oil, gas drilling in Canada set for a de­cline

Tehran Times - - ENERGY -

Drilling for oil and gas in Canada will likely de­cline by 5 per­cent in 2019, the Pe­tro­leum Ser­vices As­so­ci­a­tion of Canada has fore­cast, blam­ing pipe­line ca­pac­ity short­ages and the re­sul­tant dis­count in Cana­dian heavy to the West Texas In­ter­me­di­ate bench­mark for the out­look.

The PSAC said it ex­pected oil and gas com­pa­nies to drill 6,600 new wells next year, which would be down from 6,980 this year and the low­est num­ber of new wells in three years. Yet over the year, drilling will in­crease, the PSAC fore­cast, as the vol­ume of oil trans­ported by rail, for lack of enough pipe­lines, con­tin­ues to grow.

On the good news front, the dis­count at which West­ern Cana­dian Se­lect trades to West Texas In­ter­me­di­ate is seen to nar­row from the cur­rent over $50 a bar­rel to about $24.50 a bar­rel, with the av­er­age WTI price for 2019 pro­jected at $69 a bar­rel.

The Na­tional En­ergy Board of Canada re­cently re­leased a re­port fore­cast­ing that oil and gas pro­duc­tion will con­tinue to in­crease while do­mes­tic con­sump­tion de­clines thanks to en­ergy ef­fi­ciency. Nat­u­ral gas, along with hy­dropower and other re­new­able sources, will come to ac­count for a big­ger share of the coun­try’s en­ergy mix while oil pro­duc­tion grows for ex­ports.

In the next 20 years, NEB ex­pects crude oil pro­duc­tion to grow by as much as 58 per­cent while nat­u­ral gas pro­duc­tion ex­pands by 33 per­cent, both helped by im­prov­ing ex­trac­tion tech­nol­ogy that will main­tain the in­dus­try’s com­pet­i­tive­ness.

Not all be­lieve, how­ever, in this com­pet­i­tive­ness. In fact, in­dus­try ex­ec­u­tives are quite dis­grun­tled about the dis­count at which WCS is trad­ing to WTI as well as by the high car­bon taxes they are obliged to pay. The com­bi­na­tion of fac­tors has eaten into their bot­tom lines and will likely con­tinue do­ing it as no new pipe­line projects are com­ing on line any time soon and pro­duc­ers are forced to re­sort to costlier oil-by-rail op­tions.

Newspapers in English

Newspapers from Iran

© PressReader. All rights reserved.