Investment Opportunities In Canada's Oil And Gas Industry

Abstract

Abstract Canada and the Oil and Gas Industry Canada offers many attractive opportunities to investors seeking capital appreciation. Canada's oil and gas industry offers the following advantages: abundant natural resources; a strong economy; attractive geological potential; stable governments that encourage exploration and development; access to growing markets, particularly the United States; and, an equitable fiscal environment. Natural Resources Canada is the second largest country in the world, covering an area of 9.8 million km2 (3.8 million square miles). In addition to being highly industrialized, Canada has a large and varied base of natural resources. In terms of hydrocarbon production, Canada is the world's third largest producer of natural gas and the tenth largest producer of crude oil. Many of Canada's other natural resources are also impressive in world ranking:—third largest producer and exporter of metallic minerals;—largest pulp and paper producer;—largest producer of uranium;—second largest supplier of electrical power; and—second largest grain exporter. The Economy Canada has a population of 26 million and boasts the seventh largest economy in the industrialized world. The country's Gross Domestic Product (GDP) is in the order of $680 billion. With expansion of less than 1% in 1990, the real GDP completed its eighth consecutive year of growth since the 1982 recession. No real growth is forecast for 1991. Capital investment, as measured by business capital formation, has increased steadily since 1982 reaching nearly $80 billion in 1990. Canada has a work force of over 12 Million. Consumer prices in Canada have increased less than 5% annually over the past eight years and are expected to be stable in the near term. The value of oil and gas production for 1990 is estimated to be $22.1 billion. Capital expenditures in the oil and gas industry during 1990 are estimated at $6.3 billion. Exports of oil, natural gas, and petroleum products for 1989 were valued at $9.7 billion, offset by imports of $5.1 billion. Geological Potential Canada's oil and gas activity is centered primarily onshore in the large Western Sedimentary Basin, which extends from the province of British Columbia, at the nation's western extreme, eastward through Alberta, Saskatchewan and Manitoba. The province of Alberta is Canada's largest producing jurisdiction, accounting for 85% of the total hydrocarbon production. By the end of 1987, 2.70 × 109 m3 (17 billion barrels) of conventional oil and 3.67 × 1012 m3 [130 trillion cubic feet (tcf)] of marketable natural gas had been discovered in western Canada. In its latest report(1), the National Energy Board (NEB) of Canada estimates remaining conventional oil to be discovered in western Canada at 0.59 × 109 m3 (3.7 billion barrels). The NEB also estimates that 2.34 × 1012 m3 (83 tcf) of natural gas remains to be discovered in western Canada (Fig. 1). In addition to extensive reserves of conventional light crude oil and natural gas, Canada has a vast resource base of unconventional deposits such as heavy oil and oil sands in northern Alberta and Saskatchewan.