The Demand for Canadian Crude and Natural Gas Liquids, 1962-1967

Abstract

Abstract Since 1956 a high degree of correlation has been evident between thecyclical growth of the Canadian economy and the total demand for petroleumproducts in Canada. The author develops assumptions as to the rates of growthwhich can be expected for the Canadian economy over the next five years and, onthe basis of these assumptions, forecasts a demand for petroleum products in Canada for 1967 of about 1,175 Mb/d (thousand barrels per day). Thiscorresponds to a rate of growth in product demand of about 4.5 percentcompounded annually. Since some three-fifths of this product market fallswithin that area west of the Ottawa Valley which has been reserved to Canadiancrude and natural gas liquids under the terms of the National Oil Policy, Canadian producers can expect to market nearly 675 Mb/d in Canada by 1967. Theexport market, now beginning to be influenced by slower growth rates in thePacific Northwest and by informal quotas in U.S. markets east of the Rockies, should nevertheless provide outlets for about 325 Mb/d in 1967. Thus totalCanadian production of crude oil and natural gas liquids five years henceshould reach close to 1,000 Mb/d, a gain of 35 per cent over estimated outputin 1962. Alberta's production, influenced in the short run by developments inBritish Columbia should by 1967 still account for about two-thirds of totalCanadian output. If Alberta's production is to grow at rates faster than thosedetermined by the now relatively mature Canadian energy market, it must do soas a result of greatly enlarged export markets. Even if export markets developat no faster rates than those forecast by the author, larger new additions toreserves will have to be developed over the next five years than have beendeveloped over the last five.