Prospects For The Canadian Petroleum Industry

Abstract

Introduction In contrast with the recession occurring in the U.S. oil and gas industry, and in contrast with the caution observed by investors in other parts of the world, the Canadian petroleum industry is growing. Several reasons explain this contrast:First, the natural geographical advantages of Canada: domestically, our northern climate, vast distances and advanced industrial economy create substantial internal markets for energy. Internationally Canada is the closest foreign supplier to the United States, still the world's largest energy marker. Oil and gas sales to the United States are a large source of foreign earnings for Canada.Second, Canada has a technically and financially mature petroleum industry and a very attractive resource base. The western Canada sedimentary basin which still supports most of Canada's production still has considerable potential, being far less explored than comparable basins in the United States. In addition, Canada has a wealth of nonconventional resources (heavy oil, tar sands, enhanced oil recovery and frontier) which offer significant opportunities for the future. These natural advantages, the resource base and the market potential – have existed for a long time. To fully capitalize on these advantages, One ingredient however, was missing – an appropriate energy policy. Regrettably, over the last decade, energy policies were a matter of continuous complaints by the oil industry. Energy policies were also a subject of confrontation and division with the federation. The dissatisfaction culminated in October 1980 when the National Energy Program was introduced leading the industry in general to Slow down its investments and some foreign companies to withdraw from Canada. As early as 1982, some corrections and improvements were introduced in March and November of 1985, profound and far reaching change, were announced. Today, the policy framework for oil and gas in Canada is globally quite sound. Barring an unforeseen collapse of world oil prices, the Canadian industry has a solid foundation for sustained growth. To expand on these various themes the resource base of Canada will be reviewed, followed by a comment on the new policy framework, and illustrations of the dear signs of the recovery. The Resource Base Canada is the third largest producer of natural gas in the world, the ninth largest producer of oil and the largest supplier of sulphur to international markets. Figure 1 shows Canada's four principal sedimentary basins. Most of Canada's present oil and gas production comes from the western Canada basin. Ho ever, according to the Geological Survey of Canada, each of the three other basins has a resource potential approximately equal to that of western Canada. The oil sands deposits and oil sands belt are shown in Figure 2. Canada's light oil potential is dwarfed by non-conventional resources, chief among which are the oil sands. The Alberta oil sands and the associated bitumen-saturated dolomite contain the world's largest known oil deposits, with total bitumen in place of 2 trillion barrels. In addition there is the heavy oil belt, another enOrmous but difficult to produce resource.