Canada will continue to grow as an international oil and natural gas supplier during the next 25 years, the National Energy Board (NEB) said Wednesday.
But the expansion pace and the eventual size of the role are wide open to guesswork with scenarios, the NEB added in a 2016 edition of periodic 25-year forecasts titled Canada's Energy Future.
The murky outlook is no accident, board Chairman Peter Watson said in a preface to the 136 pages of projections and an address to the Toronto Board of Trade, where he released the report.
"To use 'uncertain' to characterize the past 18 months in Canadian energy would be an understatement," Watson wrote. "I doubt there is a single market observer who could have foreseen the dramatic fall in the global price of crude oil."
The road ahead became no clearer as the board canvassed industry, environmental and public groups to prepare the new forecast.
"Among many other factors contributing to the lack of clarity on Canada's energy future were the unprecedented market volatility, rapid deployment of advanced technologies for renewable and fossil fuel energy production, a historic climate agreement in Paris, the denial of the Keystone XL project in the U.S., the lifting of the U.S. oil export ban, as well as the lifting of sanctions on Iran," he wrote.
In the "reference case," which is rated as most likely, the annual average oil price recovers to US$80/bbl as of 2020 and US$107/bbl by 2040. The value of Western Canada Select, the blend of heavy grades that represents most of the nation's output, averages US$17/bbl less than the lighter West Texas Intermediate that is the benchmark for production in the United States.
The NEB's reference case for natural gas conceives of demand catching up with shale-sourced surpluses enough for a gradual recovery by annual average prices from the current trading range of US$2.90/MMBtu to US$4.55/MMBtu as of 2040.
The driving forces of Canadian production growth are seen as strong yet unpredictable: liquefied natural gas (LNG) exports and access for oilsands output to overseas markets via new pipelines to proposed tanker ports on the Pacific and Atlantic coasts.
The board's reference case foresees Canadian LNG exports starting at 500 MMcf/d in 2019 then climbing to 2.5 Bcf/d in 2023 and conceivably 6 Bcf/d after 2030.
But the NEB describes LNG as "a significant uncertainty" and makes no attempt to pick most likely successes from 26 tanker terminal projects that have been granted 20- to 40-year export licenses for a total of 50 Bcf/d.
Depending on commercial performance by the LNG lineup, Canadian gas output will stagnate at little more than the current 15 Bcf/d area or surpass the previous record of 17 Bcf/d to reach a new high of nearly 18 Bcf/d, said the forecast report. If LNG projects succeed beyond reference case estimates, the board said 2040 total gas production of 22 Bcf/d is conceivable.
After falling by 29% from 10.4 Bcf/d in 2007 to the current area of 7.4 Bcf/d, Canadian gas exports to the U.S. are expected to continue subsiding as consumption rises at northern Alberta thermal oilsands projects.
Use of gas in bitumen extraction and associated steam heat and power cogeneration plants has surged to 3.1 Bcf/d from 700 MMcf/d in 2000. The NEB reference case anticipates the figure, already more than 20% of total Canadian gas consumption, will keep on rising to 3.4 Bcf/d despite improving plant efficiency and emerging substitutes for steam injections into bitumen deposits such as solvents and super-sized microwave heating systems.
Canadian output of all oil types rises by 56% to 6.1 million b/d as of 2040 in the NEB reference case. The northern Alberta bitumen belt holds 97% of national reserves and is expected to account for almost all output growth by about doubling to 4.8 million b/d or four-fifths of national production over the next 25 years.
Environmental opposition to new oilsands development will, at worst, only reduce anticipated 2040 Canadian production by 500,000 b/d, even if bitumen pipeline projects are blocked by opponents, the NEB outlook said. Railway oil transport capacity is expected to rise to 1.2 million b/d, about four times current deliveries, in a "pipeline-constrained" variation of the NEB's reference case projections.
The board emphasized, however, that all the forecasts are based on current energy and environmental laws and regulations. The NEB made no attempt to guess how current political and moral commitments to cut greenhouse gas emissions from fossil fuels will be put into practice. Canadian steps towards clarifying green energy intentions will begin by spring, when the Liberal national government follows through on election promises last fall to convene a federal-provincial conference on enacting results of the United Nations climate change summit conference in December.