Canadian oil production will continue to grow: report

While the debate rages on regarding the Energy East project, the Montreal Economic Institute (MEI) notes that even in a scenario in which absolutely no new pipelines are built, oil production in the country will increase significantly from now until 2040, as the National Energy Board (NEB) stipulated in a report.

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So, it’s a mistake to believe that systematic opposition to the construction of pipelines will reduce either our production or our consumption of oil in the coming years, as certain commentators imply. “The NEB report is clear: Canadian oil production will continue to grow over the next 24 years, independent of whether the price of oil goes up, or whether pipeline projects go forward,” says Youri Chassin, research director at the MEI.

According to the NEB’s reference scenario, the price of oil would reach $80 four years from now, and $105 by 2040. In this case, Canadian production would increase to 6.1 million barrels a day by 2040, an increase of nearly 60% compared to the 2014 production level.

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Even in a scenario in which absolutely no pipelines are built during this time, oil production would have reached 5.6 million barrels a day by 2040 — still well above the current production level. But in this case, this oil would have to be transported by train, a less safe alternative.

“As numerous studies have shown, pipelines are the most effective, most reliable, most economical, and safest method of transporting large quantities of oil over long distances,” says Chassin. “The risk of a train spill is six times higher than the risk of a pipeline incident, according to the International Energy Agency.

“Canada can improve its GHG emissions record by discouraging the consumption of hydrocarbons,” he adds. “Production is a separate issue, however, and attempts to restrict it by blocking the transportation of oil are destined to fail.”

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.