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A growing world needs Canadian oil and natural gas

New analysis shows increasing global energy demand means more Canadian oil and natural gas needed even in a lower-carbon environment.

Population growth around the world is increasing demand for more energy in every form, creating a chance for Canada both to share its energy prosperity abroad and drive to a lower-carbon economy at home, according to an analysis and forthcoming report by the Canadian Association of Petroleum Producers (CAPP).

CAPP president and CEO Tim McMillan notes a new analysis shows Canada has tremendous potential to be the global supplier of choice.

The analysis finds that Canada can become the world’s energy supplier of choice: generating both economic and environmental benefits in Canada and around the world, but only if governments choose to develop Canadian oil and natural gas with competitive policies that attract investment and spur innovation.

“With the third largest reserves of crude oil and enough natural gas reserves to meet domestic energy demand for 300 years, Canada has tremendous potential to be the global supplier of choice,” says CAPP president and CEO Tim McMillan.

The analysis leads CAPP to recommend a six-part approach:

1. A national vision for oil and gas development:

The federal government must take a leadership role working with governments, industry, communities and citizens to define Canada’s vision in global oil and natural gas markets. Such a national vision needs to focus on accessing world markets, effective regulatory outcomes, a commitment to innovation, global climate leadership and enabling a fiscal framework to achieve the vision.

2. A national clean energy task force that includes oil and natural gas:

The federal government needs to work with industry, innovation agencies and provinces to adopt a national clean-energy task force that includes the oil and natural gas sector. The approach should include a commitment to research and development, as well as an attractive fiscal framework to encourage investment for Canadian oil and natural gas innovation.

3. A competitive, equivalent climate leadership plan

Climate leadership is critical for Canada’s oil and natural gas industry to become a global supplier of choice. Such policies should be developed with a balanced approach to attract investment, grow jobs and the industry while reducing greenhouse gas emissions. The federal government should work with provinces to establish an equivalency basis including Alberta, British Columbia, Quebec and Ontario, where there is a price on carbon.

"The upstream oil and natural gas sector can meet world energy demands as long as we can access new customers, manage our costs and maintain investment in our sector”.

Tim McMillan, CAPP President and CEO

4. A competitive international trade policy

Canada’s oil and natural gas sector is vulnerable to competitiveness challenges from exposure to international trade. As such, governments should recognize the sector’s energy-intensive, trade-exposed nature to prevent carbon leakage and ensure Canadian producers are globally competitive.

5. An effective and efficient outcomes-based approach to regulations

Market dynamics and mounting regulatory costs are creating barriers in an increasingly competitive market, reducing investment in Canada’s oil and natural gas sector. An efficient and predictable regulatory system and improved access to new customers will encourage investment.

6. Improved market access to ensure Canadian oil and natural gas production can reach more customers

A number of substantial infrastructure projects are currently proposed to expand market access. CAPP recommends that the federal government continue to support proposed projects that enhance market access for Canada’s resources, in a manner that adds predictability, consistency and efficiency to investment decisions.

“The upstream oil and natural gas sector can meet world energy demands as long as we can access new customers, manage our costs and maintain investment in our sector," says McMillan, adding that "Canada is leading globally on environmental policy, climate policy and civil and political rights for employees and communities.”

Despite the recent challenging economic environment, CAPP’s analysis shows the oil and natural gas sector was only second to real estate in Canada’s economic growth, generating $113 billion in gross domestic product and 600,000 jobs across the country.

Global population growth is estimated to grow to 9.2 billion people by 2040 with double the growth expected for the middle class. Global populations are expected to migrate to urban areas, increase transportation needs and expand industrialization, putting energy rates higher than today and increasing demand in all forms by 30 per cent.

Meanwhile, CAPP’s 2017 Crude Oil Forecast, Markets, and Transportation report estimates western Canadian oil supply will grow to 5.4 million barrels per day by 2030, exceeding existing pipeline capacity and highlighting the need for new pipelines in all directions.

At the same time, a recent international survey called the Global Energy Pulse highlighted Canada's opportunity from the perspective of global perceptions about oil, natural gas and Canada. The survey, conducted by Ipsos in 32 countries and reaching more than 22,000 people, found:

  • Citizens around the world believe oil and natural gas contribute to a good quality of life. 
  • Citizens around the world want to have access to more oil and natural gas in their future energy mix. 
  • By a 2:1 margin, citizens around the world would prefer to get their oil from countries that have climate change policies, such as Canada. 
  • If given the chance, citizens would prefer to buy oil and natural gas from Canada more than from any other country in the world.