Rising competition between United states Free Trade Agreement (NAFTA) members to export crude oil, poses challenges for Canada, according to a brand new report by the International Energy Agency.
“This trend is increasingly supported also by the fact that the Keystone XL expansion project did not receive approval by the U.S. Administration President Obama in November 2015,” said the IEA in its set of Thursday.
Just over a month following the U.S. President rejected TransCanada Corp.’s Alberta-to-Nebraska Keystone XL pipeline, he lifted a 40-year ban on oil exports in the country. TransCanada has filed a US$15-billion lawsuit from the Federal government for breach of obligations under Chapter 11 of NAFTA.
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Mexico can also be in a hurry to spread out up its oil sector the very first time in more than 80 years. Mexican president Pena Nieto told oil executives in the IHS Ceraweek event in Houston this week that the country will commence the fourth call for bids in December, and is launching incentives and reforms to attract major oil companies.
Mexican heavy oil barrels are noticed as a direct competitor to Canadian oilsands, especially for the vital U.S. Gulf Coast market.
The rising continental competition means Canada will probably must find additional export markets outside The united states for an increasing proportion of its oil exports in future, the IEA says.
Canadian natural gas exports towards the U.S. has fallen 30 per cent between 2007 to 2014 because the shale revolution south of the border saw domestic natural gas displaced by Marcellus producers within the U.S.
“Greenfield projects are being delayed or cancelled, and drilling activity has declined with many oil rigs and wells shut in, as the industry is scaling back capital investment and operating costs,” the IEA said.
The Paris-based energy watchdog had said within an earlier report that Canadian oil production will rise by another 800,000 bpd by 2021, due to the projects already being built, but future growth could come to a “standstill.”
“We might seem two implications for Canada: One, projects which are arrived in Canada might be negatively affected and the growth might not be once we predict, and two, we might see a lot more delays and deferrals towards the new projects,” executive-director Fatih Birol said throughout an interview in Houston on the sidelines of the oil conference.
While the IEA commended Canada for regulatory changes to pipelines, marine and rail safety, much works must be done and to ensure the country meet its target of 17 per cent decrease in greenhouse gas emissions and 30 per cent by 2030, compared to 2005 levels.
“Canada will need to implement further action if it really wants to meet its 2020 target, which remains ambitious given its current emission profile,” the IEA noted.
Amid the challenges of limited market access and growing competition, Canada also has to deal with lower for longer gas and oil prices which will decelerate investments in greenfield projects in the oilsands, shale gas, transport infrastructure and liquefied natural gas (LNG) export terminals, “impacting energy supply growth potential beyond 2020, the IEA warned.
yhussain@nationalpost.com
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