Ottawa (AFP) – Investment in the Canadian oil sector declined for a fourth consecutive year in 2017 because of “eroding investor confidence,” oil producers said Tuesday.
The Canadian Association of Petroleum Producers in its annual report attributed this to a failure to build pipelines to new markets — including the cancelled Northern Gateway and Energy East oil pipelines, and the Pacific NorthWest LNG conduit — as well as changes to the nation’s energy regulatory framework.
Investments in the Canadian oil sector plunged 47 percent from 2014 to 2017 to Can$43 billion (US$33 billion), while last year alone they rose by 38 percent in the United States to around US$120 billion.
“The biggest challenge facing Canada’s crude oil industry is the need for pipelines,” said the CAPP report, noting that crude oil supplies grew to 4.2 million barrels a day last year, exceeding the current pipeline capacity.
The report comes after Prime Minister Justin Trudeau’s administration stepped in to take over the controversial Trans Mountain pipeline to ensure it gets built, paying Can$4.5 billion (US$3.5 billion).
The pipeline was approved in 2016 to move 890,000 barrels of oil a day from landlocked Alberta to the Pacific coast for export overseas, but continued to face dozens of legal challenges and illegal protests at construction sites.
Currently 99 percent of Canada’s oil exports, or about 3.4 million barrels per day, are sold to the United States at a discount, and access to the Pacific coast is seen as key to diversifying the world’s sixth largest oil producer’s energy exports.
Canada’s daily oil production of 4.2 million barrels last year is expected to climb to 5.0 million barrels in 2020 and 5.6 million barrels in 2035, the CAPP estimates.