Long Term Global Energy Demands are Extremely Positive for the Canadian Energy Sector
Despite the current Canadian oil and gas production crisis, long term global energy demands are extremely positive for the Canadian energy sector.
Global demand for energy is expected to increase 30% by 2040 as both developed and emerging economies continue to grow and standards of living improve. China and India’s combined demand growth for oil is leading the charge. Demand is expected to be equal to more than 90% of the world’s increased demand from 2015 to 2040 according to the World Energy Outlook 2018 – the gold standard of energy analysis. https://www.iea.org/weo2018
The report highlights a few key trends in terms of what energy demand will look like in 2040 compared to today.
– Rising incomes and global population growth of 1.7 billion people are mainly behind the increase in global energy demand.
– Total oil demand will increase by 10%. While oil use in cars will peak by the mid-2020s, increasing need for petroleum will continue to drive the need for oil.
– Natural gas demand will increase by 43% because it’s a lower greenhouse-gas (GHG) emitting fuel compared to coal. Natural gas power generation emits nearly 40% LESS CO2 compared to coal.
The IEA sees an opportunity for natural gas to replace coal for electricity generation, and so help reduce global greenhouse gas emissions. Canada is the fifth largest producer of Natural Gas and currently only exports natural gas to the United States. However to meet the rising global demand, we will soon need to ship our Natural Gas to other parts of the world.
Although 2016 and 2017 saw an increase in natural gas exports to the U.S., there has been a steady decline in natural gas exports since 2007 as the U.S. has developed its own domestic supply of natural gas. In fact, the United States is now a net exporter of natural gas for the first time in 60 years.
As well, between 2008 and 2017, the US has increased its crude oil production by 87%. The United States is Canada’s largest customer of both oil and natural gas, and at the same time has become one of its biggest competitor in the global marketplace.
Alarmingly the IEA report notes that the world is headed to an oil supply crunch due to currently insufficient levels of investment in exploration and production. Canada is positioned to be a major player in elevating this potential crisis if we’re able to eliminate the current red tape placed upon oil and gas producers, along with removing the obstacles of shipping our energy products to the rest of the world.
Interestingly, on a side note, regulatory demands placed on Canadian energy products do not apply to foreign energy that is imported into Canada. This also includes energy products imported from the the United States into Canada.
The IEA suggests approvals of conventional oil projects need to double from their current low levels in order to meet growing demand.
“Over 70% of global energy investments will be government-driven and as such the message is clear – the world’s energy destiny lies with decisions and policies made by governments.”
Dr Fatih Birol, Executive Director, IEA
Alberta’s energy industry produces more oil than most OPEC members and has the world’s third-largest petroleum resources and yet is in crisis due to the federal government’s inability to act on the behalf of the Canadian energy sector.
However, the UPC government in Alberta, lead by Jason Kenney, vows to streamline the Alberta Energy Regulator to reduce the amount of red tape for oil and gas companies wanting to drill new wells or build new oilsands projects.
Companies such as Alberta’s AiM Land are also in much demand by oil and gas producers in the current economic climate because of their expertise in regulatory compliance, document preparation and land negotiations. Expert Upstream teams throughout Canada are quietly working behind the scenes, helping to mitigate some of the regulatory burdens placed on Canadian energy producers.
Eventually, in the years to come Canadian pipelines will be built, innovation will continue by Canadian energy producers and Upstream expert teams will still be working diligently to keep projects moving forward. Once governments are on board helping Canada become a major player in the supply of energy that is required to meet the rising global demand, all Canadians futures will be brighter.