Canadian oil and natural gas production will keep growing, but soft prices and environmental restrictions will slow the pace and generate setbacks, the National Energy Board (NEB) predicted Wednesday in a revised 25-year forecast.
Natural gas output is expected to drop temporarily as effects of drilling slumps and competition by shale supplies from the United States deepen. But the decline is forecast to be brief, followed by increases for overseas exports of liquefied natural gas (LNG).
The revised projections anticipate total Canadian oil production rising by 41% to 5.7 million b/d as of 2040, a marginal downward adjustment from the 6.1 million b/d predicted last winter (see Daily GPI, Jan. 28).
Oilsands development will propel the growth by rising to 4.3 million b/d in 2040, a 70% increase from the 2015 average of 2.5 million b/d. Thermal in-situ, underground extraction projects that burn high volumes of natural gas, are expected to lead the output increases.
Total Canadian natural gas output is projected to slip by 4% to 14.8 Bcf/d in 2020 from the 2015 average of 15.4 Bcf/d. But LNG exports are expected to begin in 2021 and reach 2.5 Bcf/d by 2025.
No rapid major improvements are foreseen for gas prices, but LNG exports, plus firming markets because of demand for power generation and oilsands plant fuel, are expected to increase production to 17.7 Bcf/d as of 2040.
The NEB, echoing Canadian industry consensus, remains skeptical of oil price movements driven by speculation about behavior in the Organization of the Petroleum Exporting Countries.
The board’s revised outlook lowers expectations for oil to US$68.00/bbl as of 2020, down $12.00 from its forecast last winter, and to $90.00/bbl in 2040, down $17.00 from the previous prediction.
The agency also emphasized that the projections are anything but sure bets, because the unpredictability of prices is compounded by evolving policies on greenhouse gases and Canadian federal and provincial carbon taxes. The policy realm remains too incomplete to factor reliably into economic models.