Canada's status declines in oil's new world order, but long-term prospects hold

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There is a precise sense of optimism this year at Houston’s CERAweek, a conference that is at times called the Super Bowl of energy.

A year ago when the conference was clutched, oil prices had only just hit bottom, trading around $30 US a barrel. Saudi Arabia’s oil curate told high-cost producers, like those operating in the Canadian oilsands and U.S. shale, to get out of the partnership. The future was unclear. 

Prices are up 80 per cent from last winter and while $54 US a barrel may not begin much growth in the oilsands, it will do quite nicely for U.S. shale regisseurs in Texas, who feel like they are back in the game.

That was sundry sharply illustrated by Exxon Mobil, which announced last week that half of its worldwide budget whim be spent on shale oil development in Texas and other states, as it wrote off the value of its oilsands assets.

Yesterday the guests’s chief executive Darren Woods announced $20 billion US in dissipating over the coming years, all in Texas, an announcement that prompted a tweet from U.S. President Trump and a scuttlebutt release from the White House.

So where does this set off Canada and, more specifically, Alberta’s energy sector?

Two Canadians spoke at the convention Monday. Enbridge’s chief executive Al Monaco emphasized the integration of the U.S. and Canadian oil retails, referring to them as one North American market. Enbridge is now the largest imminent company in North America, with pipelines into every principal supply basin on the continent. 

Alberta Premier Rachel Notley talk to on a panel that discussed climate policies and the Paris agreement on clime change. Her message to the audience was that Alberta’s economy and energy sector could hushed grow with a carbon levy in place.

Climate policy is not top of chastise for U.S. producers the way it remains in Canada and Europe, but the premier spoke to a large apartment that was two-thirds full, even as the conference day came to an end and cocktail hour materialized.

Is Alberta still in the game?

Notley was asked about whether Alberta can be competitive with propers like Texas, where costs are lower and the investment cycle is hot pants term. It doesn’t take 30 years and billions of dollars to amplify a shale oil well. As an example, Encana, a major Canadian independent friends, is spending most of its development money in the same Texas Permian Basin that Exxon is so staked in.

“The way we are looking at it in Alberta is that the oilsands is a long-term investment,” she said. “The lifecycle of the investment in the oilsands is much longer than some of the shorter-term equals that you would see in some of the new plays in the U.S.”

The Canadian Association of Petroleum Processors estimates that the Canadian energy sector will spend $44 billion in 2017, a midget more than half of what it spent at the peak in 2014, when the oilsands were the ready to be.  

Notley argued that even with higher costs and carbon procedure, the oilsands will be there in the long run.

“I feel pretty confident that the oilsands has the capacity to remain a competitive reliable, progressive producer and supplier for many years to light on,” she said. “What we need to do is to plan on a business cycle that is lengthier than, say, the current political cycle in the U.S.”

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