TORONTO ? Canada’s top energy regulator says the country’s crude oil production will continue to grow until a minimum of 2040 even when key pipeline projects do not proceed and despite government policies to reduce greenhouse gas emissions.
The National Energy Board’s report forecasts crude oil production to develop 56 per cent to achieve 6.1 million barrels each day by 2040 from the current level of 4.3 million bpd. Its previous forecast in November 2013 projected development of 5.8 million bpd by 2035.
“For some it may be a bit of a surprise because a few of the discussion we have seen in the united states sometimes focuses on the interest rate of development of renewable types of energy and their potential,” Peter Watson, chair from the NEB, said Wednesday inside a speech towards the Toronto Region Board of Trade.
The report may come as a debate rages across the country around the environmental costs of developing Canada’s oil deposits, estimated to become the third-largest on the planet after Venezuela and Saudi Arabia. A lot of Canada’s oil resources have been in its oilsands resources in Alberta, which is carbon-intensive to extract. The NEB, the independent federal regulator, has itself been under fire recently from aboriginal and local communities for approving crude oil pipelines along with other oil and gas projects without correct consultation.
Related
- Is OPEC’s plea for an oil production cut nothing but cheap talk?Joe Oliver: Canada’s foolish pipeline flubs
-
-
-
Watson said the report echoes other forecasting agencies’ projections that all kinds of wind turbine will grow significantly for many years in the future.
More crucially, many projects will remain profitable and production will still rise to five.Six million bpd whether or not the main export oil pipeline projects are rejected, Watson said, eight per cent lower than the base-case scenario. “In this case, we project the use of rail would increase, which is a more expensive mode of shipping, and that would result in affordable prices for Canadian producers.”
Low oil prices, however, will have a bigger effect on Canadian production. An extended duration of prices stuck around US$55 per barrel would see Canadian oil production rise more modestly to 4.8 million bpd, the NEB forecasts.
“Prices that are lower for longer implies that investment won’t be significant enough to develop production beyond what’s going to be reached in the next few years,” Watson said.
The NEB forecasts Brent crude prices to average US$80 per barrel by 2020 and US$105 per barrel by 2040 in its base case, and US$55 per barrel in 2020 and US$80 per barrel in 2040 in its low oil-price scenario.
On Tuesday, a report by federal environment commissioner Julie Gelfand asserted the NEB isn’t adequately checking to ensure that around 73,000 kilometres of existing oil and gas pipelines being run by about 100 companies are operating safely.
The Liberal federal government which in fact had pledged to “modernize the NEB,” is expected to announce new rules on assessing pipeline projects later today.
The NEB report acknowledges that greenhouse gas emissions will rise throughout the forecast period to 2040, echoing the federal government’s GHG report published this past year.
“This is important since it shows that scenarios like low or high oil and natural gas prices, or whether we build pipelines or LNG terminals, aren’t sufficient by themselves to place Canada on the path to declining GHG emissions,” Watson said.
Natural gas will even gain ground, rising 22 per cent by 2040, because of liquefied gas exports and a switch from coal to natural gas-fired electrical generation. Gas will contribute about 20 per cent of Canada’s power generation after the forecast period.
“Factors contributing to the rise include shorter construction times of these facilities, lower GHG emissions than coal and a well-developed gas pipeline network in Canada,” the NEB chair said.
While hydroelectric will dominate the nation’s electricity supply, wind, biomass and solar generation will also nearly double over the projection period.
Newly proposed policies on climate change will put Canada in the position of having “some of the very most advanced climate approaches globally,” and Watson acknowledged that could disrupt the forecast.
“It is clear that these emerging climate policy developments will be a critical element in Canada’s energy and environmental future, and a considerable uncertainty for long-term energy projections.”
yhussain@nationalpost.com
YAD_FPEnergy
