Market Report, "Canada Oil & Gas Report Q3 2016", published

From: Fast Market Research, Inc.
Published: Fri Jul 22 2016

Our growth outlook for Canada's oil and gas industry remains modest given mounting headwinds in both the upstream and midstream sectors within a low commodity price environment . The greatest threats are unfavourable project economics and regulatory headwinds that will hamper the growth of oil sands-driven production beyond 2018 , much-needed midstream expansions and LNG terminal development. This is exacerbated by the likely drop in exploratory activity throughout Canadian acreage as companies reduce capital expenditures .

Key developments in Canada's oil and gas sector are:

We have slightly downgraded our 2016 Canadian crude production forecast to account for unplanned outages in Q216. The wildfires which surrounded Fort McMurray pose a limited threat to the sector's continued growth through 2018 owing to a strong upstream project pipeline.

Full Report Details at

We are reaffirmed in our negative outlook on long-term crude production growth in Canada following given sustained weakness of commodity prices. This, combined with insufficient pipeline takeaway capacity, will join with the government's stronger environmental mandate to undermine proposed upstream and midstream developments.

Prime Minister Trudeau and the Albertan government's financial commitments will strengthen support for midstream projects in the province to service existing oil sands operations. However, under its new leadership, Alberta will boost its environmental mandate, undermining pre-FID upstream developments.

The proposed 50,000b/d expansion of Imperial Oil's Cold Lake bitumen project in March represents a unique opportunity for a more financially stable company to explore more efficient production methods. The extended life-time of this brownfield project supports its development but does not indicate a broader expansion of Canadian upstream capacity beyond 2017.

On April 7, the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) issued two Calls for Bids in the Eastern Newfoundland and Jeanne d'Arc Regions under the Scheduled Land Tenure (SLT) Regime in the Canada-Newfoundland and Labrador Offshore Area. The bids cover a total of 16 parcels which encompass over 3.3mn hectares of offshore acreage. Bids are due on November 9.

The negative impact of low oil prices on fixed investment in Canada will persist in 2016. We forecast real GDP growth to accelerate from 1.2% in 2015 to 1.4% this year. Beyond 2016, however, we believe that further economic rebalancing and strong private consumption will see the economy return to 2.0% growth, supported by the rollout of a public infrastructure investment programme.

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