Prices Riling Up the Oil and Gas Sector: Canada’s Two-Year Energy Outlook

The Conference Board of Canada, 14 pages, July 19, 2022
Issue Briefing
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This quarterly economic forecast presents the medium-term outlook for the Canadian economy. This release focuses on energy. For an overview of all major components of the economy, go to the Canadian Outlook main page.

Document Highlights

  • West Texas Intermediate (WTI) crude oil is forecast to remain elevated in 2022 and 2023. The elevation is partly driven by the war in Ukraine and Western sanctions on Russian energy exports.
  • The price differential between Canadian heavy crude and the WTI has widened in recent months because of major oil releases from U.S. strategic reserves. We expect the discount to tighten and remain favourable for the remainder of 2022.
  • GDP in the oil and gas sector diminished during the first quarter of 2022 due to unexpected maintenance in Alberta’s oil patch. But we estimate that the situation will quickly turn around. Additionally, U.S. demand for Canadian crude will pick up during the second half of 2022.
  • Producers are responding to the higher price situation and are increasing their capital spending guidance relative to what they tabled at the beginning of 2022. Investment in real terms is set to increase significantly as companies increase drillings.
  • The energy sector is plagued with one of its worst labour shortages in history. Failure to attract new workers will severely limit future investment and production growth opportunities.
  • Canada is welcoming an increasing number of clean energy projects as it works to meet its net-zero emissions target by 2050.

Table of Contents

Key Findings
Energy Snapshot
Overview
Prices Remain Elevated but Major Risks Ahea
Tumultuous Start of the Year for Oil Production
Lack of Workers in the Oil and Gas Sector
Oil Exports Slump but Brighter Months Ahead
Capital Spending On the Rise
Methodology

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