Investments in the oil and gas industry of Canada’s Alberta, as well as production of the commodities fell last year by a substantial rate, on the back of the persistent oil price rout, the province’s Energy Regulator said in its annual report on reserves and supply and demand outlook.
The drop in investments was notable, at 35 percent, the AER said. The amount invested in 2016 stood at US$19.52 billion (C$26 billion), down from US$30 billion (C$39.8 billion). This year, however, the AER expects investments in Alberta’s oil and gas industry to recover somewhat as a result of higher oil prices: the average for West Texas Intermediate is projected at US$53 a barrel.
Conventional oil output fell by 16 percent last year, to 166 million barrels, while bitumen production from the oil sands inched down much more slightly, by 3 percent to 897 million barrels. Investments in oil sands, however, dropped by 33 percent to US$12 billion (C$16 billion).
Alberta remains the biggest source of oil and gas in Canada, the regulator also noted in its report, accounting for 81 percent of the country’s crude oil output and 67 percent of its natural gas output. Bitumen from the oil sands made up 60 percent of Canada’s overall crude oil production last year, averaging 2.3 million barrels per day.
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For reserves, the AER reported that the oil sands have some 165 billion barrels of bitumen left in them. Conventional oil reserves are estimated at 1.6 billion barrels and gas reserves are seen at 28.2 trillion cu feet.
Against the background of these figures, PM Justin Trudeau’s recent pledge to phase out the oil sands looks difficult to keep. The oil sands industry is the third-biggest employer in Alberta, and it produces almost all of the country’s oil. Phasing it out will be a real challenge.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.