Canada's oil and gas industry faces important changes in 2013
The Canadian oil and gas industry is facing a new year that could bring numerous changes not just for the sector but also for the development of the industry in the whole of North America. Analysts find it hard to predict how 2013 will turn out for Canada and its energy sector, amid unstable oil prices, weak natural gas prices, decisions about new oil pipelines and increasing production of tight oil in Canada and the United States, the Financial Post has reported.
Without doubt, the most important development is expected to come from the U.S., as President Barack Obama is still to make his decision on the Keystone XL pipeline that would have the capacity to transport 900,000 barrels of oil per day between Alberta and the Gulf Coast. The permit is expected by the end of March, although no formal deadline has been set. If the project gets the go-ahead TransCanada Corp. will start construction immediately, with a projected date of completion in early 2015.
Another major development for the oil and gas industry set for next year is Canada’s decision on foreign investments, most specifically on state-owned enterprises. While Ottawa is considering its moves, several foreign corporations have expressed interest in Canadian businesses. China’s CNOOC Ltd. has announced plans to buy oil producer Nexen Inc., while Malaysia’s Petronas is bidding to purchase Progress Energy Resources Corp. It is expected that the broader guidelines on foreign investments will be revealed when the Nexen decision is announced. The decisions on both these deals are expected by the end of December. When the guidelines are eventually released a pick-up in activity can be expected, as a number of Chinese and Indian companies are waiting for the decision to plan their moves, the Financial Post said.
Meanwhile, next year will also see other pipeline plans in progress in Canada. According to Alberta energy minister Ken Hughes, there is a huge amount of resources that need to be used to their full capacity. One of the projects, which could see oil produced in Alberta being shipped across Canada to Saint John, New Brunswick, has already been supported by several provincial premiers.
All these changes might mean a glimmer of hope for Canadian oil and gas industry. Their effect, combined with the impact of the capacity expansion of two key refineries in the U.S. that use Canadian heavy oils — BP plc’s Whiting refinery near Chicago is currently going through an expensive upgrade to process 260,000 barrels per day of heavy oil, while a refinery run by Marathon Petroleum Corp. in Detroit has expanded capacity to process another 100,000 barrels per day — might give a boost to the sector, the Financial Post said.