HOUSTON, T.X. — A report published by the International Energy Agency on Monday says that a bump in Canadian and American crude oil production won’t be enough to compensate for a lack of global exploration investment, which will result in a supply shortage in a few years’ time.
According to an article in the Financial Post, the Paris-based energy watchdog said “it is far from clear that enough projects will enter the pipeline in the next few years to avoid a potentially tight market by 2020 and with it, the possibility of a price spike.”
The IEA’s report comes on the tail of many oil and gas producers announcing that they will be cutting their exploration budgets in the next few years. The world fell into a glut of oil after supply sharply outpaced demand in the early 2010’s. Late last year, OPEC and other oil producing countries agreed to slow down production in an attempt to help the price of oil return to more normal levels.
Investment in upstream oil and gas development plummeted 25 per cent in 2015, and an additional 26 percent in 2016.
The IEA has pegged Canadian production growth at around 800,000 barrels per day by 2022, putting total production at 5.3 million bpd, up from 4.5 million bpd in 2016.
That growth is forecast to largely come from the Alberta oilsands. New projects coming online include Suncor Energy Inc.’s Fort Hills oilsands mine; ConocoPhillips Co.’s expansion of its Surmont steam-driven project; Cenovus Energy Inc.’s Foster Creek expansion; and Canadian Natural Resources Ltd.’s Horizon expansion.
Story courtesy The Financial Post: http://business.financialpost.com/news/energy/iea-predicts-oil-supply-shortage-and-price-spike-within-three-years.