OIL
Canada’s oil industry remains competitive globally due to lower breakevens, but federal climate regulations could cap long-term output, according to BNEF.
- Canada produces 4.5m b/d of oil, 3m b/d from oil sands. Around two thirds of this output has a production cost below $20/b.
- Differentials between heavy sour Canadian crude and WTI have averaged $15/b in the last five years but has narrowed to $11/b amid the 590k b/d expansion of the TMX pipeline and with Mexico’s Maya crude exports to the USGC falling.
- This could cut in-situ breakeven breakevens to below $40/b, making it even more competitive globally BNEF said.
- However, crude production from oil sans is around 13% of Canada’s greenhouse gas emissions. Canada is planning a 40%-45% reduction in emissions from 2005 levels by 2030, possibly putting it at odds with increased output.
Source: Bloomberg
Source: Bloomberg
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