Canada’s oil sands production will continue to grow over the next ten years despite a shortage of pipeline capacity and several years of underinvestment. That’s what a study from IHS Markit has found. Despite falling investment, production will continue to grow as every incremental dollar put into new production leads to growth, regardless of international prices, the research company noted.
The country’s oil industry has been plagued by underinvestment resulting from the 2014 price collapse and by very strong opposition to any new pipeline capacity project. Three such projects were suspended by the federal government but one, Trans Mountain’s expansion, received the green light because even a government as liberal as Justin Trudeau’s realized that pipeline capacity shortages are in no one’s favor.
Now this opposition has led to a trade war of sorts between British Columbia, which strongly opposes the pipeline expansion, and Alberta, which needs the expansion to stop paying higher rates for shipping oil by rail.
The fact that even in such conditions the local oil production will continue to grow is a clear indication of the resilience of the industry despite the challenges.
Deals, Mergers & Acquisitions
• Exxon has bought a 2.5% interest in the Baku-Tbilisi-Ceyhan oil pipeline that ships crude from the offshore Azeri-Chirag-Guneshli field complex in the Caspian to Turkey via Georgia. The seller is a…