Canadian Natural Resources Minister Joe Oliver said his country is on the verge of becoming an energy superpower. While the United States mulls its options for energy hegemony, a recent free-trade deal with South Korea and pipeline developments suggest Canada may beat it to the punch.
The International Energy Agency said that, despite recent volatility, Asian economies are contributing to the bulk of macroeconomic growth. That, in turn, means global oil demand is expected to grow by 1.4 million barrels per day this year.
Oliver said at an energy conference in Ontario his country has the economic fundamentals and energy wealth on hand to help meet that growing demand.
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"Canada is emerging as a 21st century energy superpower [and is] unmatched in reliability, responsibility, and potential," he said.
Canadian oil production is estimated to have bested its December record of 4.2 million bpd last month by 100,000 barrels. The Organization of Petroleum Exporting Countries said in its latest monthly market report fourth quarter oil supply from Canada was "higher than expected," the number of wells drilled in Alberta, home to bitumen plays, will increase and fourth quarter 2014 production should reach 4.25 million bpd.
Last month, Canadian Prime Minister Stephen Harper and Mexican President Pena Nieto agreed to work to encourage members of the private sector to "seize new opportunities" in the energy sector. Last week, he signed a free-trade agreement with South Korea to do the very same.
During a joint meeting with South Korean President Park Geun-hye, Harper said he was seizing the opportunity presented by Asia's economic growth.
"It is growth in global trade over the past generation that has been largely responsible for wealth creation around the world and Canada is at the vanguard," he said.
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Oliver said Canada is losing out on about $35 million a day because crude oil reserves are landlocked. Support is growing, however, for the Northern Gateway pipeline, which could bring as much as 525,000 bpd to a British Columbia port for exports to Asia. On the other side of the coast, Canadian pipeline company Enbridge won regulatory approval to reverse part of its Line 9 pipeline system so that it will carry more crude oil from western Canadian plays to refineries in Quebec. In theory, at least, reversing Line 9 could help get even more Canadian oil to foreign markets. Apart from Line 9, TransCanada wants to build its Energy East project to send 1.1 million bpd to Canada's eastern coast and, for all intents and purposes, Keystone XL is an export pipeline.
For fourth quarter 2013, Canada exported more than 95 percent of its crude to the United States. Oliver said he expects oil sands production to reach 5 million bpd by 2035 and by then, some of that will be overseas. While U.S. lawmakers pressure the White House to reverse a 1970s ban on crude oil exports, the Canadian government is already signing the trade deals and building the pipelines that could be its international trump card.
By Daniel J. Graeber of Oilprice.com