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Continuing Challenges in the Oil and Gas Sector

Explore the current landscape of the Canadian oil and gas industry, including shale revolution impacts, price uncertainties, market challenges, and the need for policy adaptions. Learn about the state of drilling, capital investments, and future prospects amid global shifts.

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Continuing Challenges in the Oil and Gas Sector

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  1. Continuing Challenges in the Oil and Gas Sector

  2. Canadian Association of Petroleum Producers • Represents large and small producer member companies • Members explore for, develop and produce natural gas, natural gas liquids, crude oil, and oil sands throughout Canada • Produce about 85 per cent of Canada’s natural gas and crude oil • Associate members provide a wide range of services that support the upstream crude oil and natural gas industry

  3. The Story of the Past Few Years…

  4. Shale Revolution • Horizontal drilling combined with multi-stage hydraulic fracturing • Allows access to shale gas and tight oil deposits • Leads to large North American supply

  5. Crude Oil and Natural Gas prices Crude Oil Prices(WTI NYMEX) $US per barrel Natural Gas Prices(AECO Daily Spot Price) $Cdn/mcf

  6. Upstream Capital Investment in Canada Combined Capital Investment % = Year/year change -34% -33% +45% -32% -35% -26% -11% 2014 2015 2016E 2017F

  7. Yr/yr change in drilling: 2015: – 49% 2016: -28% 2017: +44% Total Wells Drilled in Western Canada 2017F = 5,400 2016 = 3,744 Source – CAPP. Based on Rig Release

  8. Current Challenges

  9. Price Uncertainty

  10. Cost Structure • Still key focus of producers • Disciplined in operations • Efficiency and productivity • Targeting best resource plays • Government policy…?

  11. Markets, Markets, Markets • Natural Gas: • U.S. threat • Losing Eastern U.S. and Canada • Challenges in oil sands • Need new foreign and domestic markets • Oil: • Capacity filling • U.S. threat • Need capacity and pipes

  12. Challenges from the United States

  13. Climate Policy • Support move to lower carbon future • Flexibility to allow for best business decisions • Protection from carbon leakage

  14. Caribou

  15. What does it mean?

  16. Looking ahead… • Improved economic conditions leading to increased activity levels but price uncertainty remains • Not all areas of the province likely to come back equally • Producers focusing on highest value resource: • Montney • Duvernay • Cardium • Viking • Other areas of the province likely to see continued challenges/declines: • Different sets of issues to be managed

  17. It’s no longer about supply… • 10 years ago, North America was running out of natural gas • Shale revolution has opened up vast oil and natural gas resources here, in the United States, around the world • Have a world class resources in Alberta • Need access to the resource • Need to be competitive to attract investment • Need access to world markets

  18. Canadian Advantage…?

  19. Thank you!

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