A Canadian industry group is calling for more urgency from government officials
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Higher production from US and Canadian rigs has undermined OPEC’s oil-cut strategy, thus preventing significant price increases over the next few years, according to a new report from Deloitte.
The report said OPEC’s cuts reduced oil production by around 1.8 million barrels per day, according to CBC News. However, lower-than-expected demand during the summer season and reported increases in gasoline stockpiles resulted in prices hitting a six-month low in June.
“I think this is just a sign of the volatility we're going to continue to see,” Andrew Botterill, a partner with Deloitte, told the news outlet. “[W]e expect to see more of that in the coming year.”
The firm’s latest forecast for 2017 puts West Texas Intermediate at $US48 per barrel and Edmonton Light at $59 per barrel. Botterill told CBC News that he expects WTI to hover between $45 and $60 for the next three years, as producers are drilling new wells effectively and will probably be efficient with capital spending, avoiding debt situations.
Natural gas prices are also expected to stay unchanged with North American supply and demand, as well as storage levels, remaining much the same about the five-year average.
The Canadian Association of Petroleum Producers (CAPP) has released its own report, titled A Competitive Policy and Regulatory Framework for Alberta's Upstream Oil and Natural Gas Industry, which calls for government support to make the provincial oil and gas sector more competitive.
According to CAPP, the oil and gas industry has gotten weighed down with recent federal and provincial policy changes, including regulations on methane emissions, carbon pricing, tax hikes, and wildlife protection. Policymakers in the US, meanwhile, have been reducing regulatory burdens to promote oil and gas capital investment.
The group forecasts capital spending in Canada to reach $44 billion in 2017, a 46% decline from 2014’s $81 billion. Meanwhile, spending in the US for 2016 is expected to rise 38% and reach $120 billion. To deal with the investment gap and the “new normal” of lower oil prices, CAPP has called on Alberta to create a “Sustainable Prosperity Steering Committee.”
“What we're asking for today is more urgency,” said CAPP President Tim McMillan. “We don't think the current path we're on will get us to the paths that would be acceptable to the people that work for our industry or Albertans in general. And we'd like to work with governments to find ways to reposition us.”
The committee would let industry and government work together “to find solutions that bring back investment, enhance competitiveness and regulatory timelines, address uncertainty caused by federal initiatives and ultimately create jobs for Albertans,” according to the report.
Based on the report’s analysis, collaboration between Alberta and the industry could result in a $5-billion boost to the provincial economy and 24,000 new jobs over the next three years.
“The opportunity is to work together on a made-in-Alberta competitiveness plan that allows our oil and natural gas industry to compete in a changing world dynamic while maintaining world-class environmental and regulatory standards,” it said.
For more of Wealth Professional's latest industry news, click here.
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The report said OPEC’s cuts reduced oil production by around 1.8 million barrels per day, according to CBC News. However, lower-than-expected demand during the summer season and reported increases in gasoline stockpiles resulted in prices hitting a six-month low in June.
“I think this is just a sign of the volatility we're going to continue to see,” Andrew Botterill, a partner with Deloitte, told the news outlet. “[W]e expect to see more of that in the coming year.”
The firm’s latest forecast for 2017 puts West Texas Intermediate at $US48 per barrel and Edmonton Light at $59 per barrel. Botterill told CBC News that he expects WTI to hover between $45 and $60 for the next three years, as producers are drilling new wells effectively and will probably be efficient with capital spending, avoiding debt situations.
Natural gas prices are also expected to stay unchanged with North American supply and demand, as well as storage levels, remaining much the same about the five-year average.
The Canadian Association of Petroleum Producers (CAPP) has released its own report, titled A Competitive Policy and Regulatory Framework for Alberta's Upstream Oil and Natural Gas Industry, which calls for government support to make the provincial oil and gas sector more competitive.
According to CAPP, the oil and gas industry has gotten weighed down with recent federal and provincial policy changes, including regulations on methane emissions, carbon pricing, tax hikes, and wildlife protection. Policymakers in the US, meanwhile, have been reducing regulatory burdens to promote oil and gas capital investment.
The group forecasts capital spending in Canada to reach $44 billion in 2017, a 46% decline from 2014’s $81 billion. Meanwhile, spending in the US for 2016 is expected to rise 38% and reach $120 billion. To deal with the investment gap and the “new normal” of lower oil prices, CAPP has called on Alberta to create a “Sustainable Prosperity Steering Committee.”
“What we're asking for today is more urgency,” said CAPP President Tim McMillan. “We don't think the current path we're on will get us to the paths that would be acceptable to the people that work for our industry or Albertans in general. And we'd like to work with governments to find ways to reposition us.”
The committee would let industry and government work together “to find solutions that bring back investment, enhance competitiveness and regulatory timelines, address uncertainty caused by federal initiatives and ultimately create jobs for Albertans,” according to the report.
Based on the report’s analysis, collaboration between Alberta and the industry could result in a $5-billion boost to the provincial economy and 24,000 new jobs over the next three years.
“The opportunity is to work together on a made-in-Alberta competitiveness plan that allows our oil and natural gas industry to compete in a changing world dynamic while maintaining world-class environmental and regulatory standards,” it said.
For more of Wealth Professional's latest industry news, click here.
Related stories:
Are Canadian investors ready to give up oil?
As crude falls, funds pour into oil ETF
