Rising competition between North American Free Trade Agreement (NAFTA) members to export crude oil, poses challenges for Canada, according to a brand new report through the International Energy Agency.
“This trend is increasingly supported also because the Keystone XL expansion project did not receive approval through the U.S. Administration President Obama in November 2015,” said the IEA in the set of Thursday.
Just on the month after the U.S. President rejected TransCanada Corp.’s Alberta-to-Nebraska Keystone XL pipeline, he lifted a 40-year ban on crude oil exports in the country. TransCanada has filed a US$15-billion lawsuit against the Federal government for breach of obligations under Chapter 11 of NAFTA.
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Mexico can also be in a rush to spread out up its crude oil sector for the first time in more than 80 years. Mexican president Pena Nieto told oil executives at the IHS Ceraweek event in Houston this week the country will commence your fourth call for bids in December, and it is launching incentives and reforms to draw in major oil companies.
Mexican heavy oil barrels are seen like a direct competitor to Canadian oilsands, specifically for the vital U.S. Gulf Coast market.
The rising continental competition means Canada will likely must find additional export markets outside The united states to have an increasing proportion of their oil exports in future, the IEA says.
Canadian natural gas exports to the U.S. has fallen 30 percent between 2007 to 2014 as the shale revolution south of the border saw domestic gas displaced by Marcellus producers in the U.S.
“Greenfield projects are being delayed or cancelled, and drilling activity has declined with lots of oil rigs and wells shut in, as the industry is scaling back capital investment and operating costs,” the IEA said.
The Paris-based energy watchdog had said within an earlier are convinced that Canadian oil production will rise by another 800,000 bpd by 2021, due to the projects already under construction, but future growth could come to a “standstill.”
“We may seem two implications for Canada: One, projects that are under way in Canada might be negatively affected and the growth might not be as we predict, and two, we might see a lot more delays and deferrals towards the new projects,” executive-director Fatih Birol said during an interview in Houston around the sidelines of the oil conference.
While the IEA commended Canada for regulatory changes to pipelines, marine and rail safety, much works must be done and also to ensure the country meet its target of 17 per cent decrease in greenhouse gas emissions and 30 per cent by 2030, compared to 2005 levels.
“Canada will now have to implement further action if it really wants to meet its 2020 target, which remains ambitious given its current emission profile,” the IEA noted.
Amid the difficulties of limited market access and growing competition, Canada also offers to deal with lower for extended gas and oil prices which will decelerate investments in greenfield projects in the oilsands, shale gas, transport infrastructure and liquefied gas (LNG) export terminals, “impacting energy supply growth potential beyond 2020, the IEA warned.
yhussain@nationalpost.com
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