CALGARY – Canadians will use less oil and gas in the future, while pumping more of it than ever before, a new report from the National Energy Board shows.
Canada’s energy and pipeline regulator released its annual energy and power forecast on Wednesday, which painted a divergent picture of the country’s supply and demand for energy wherein the country continues to produce more and more energy while using less.
The report is a forecast of oil, natural gas, nuclear and renewable power sources over time and shows that “Canada is becoming more energy efficient,” NEB chair Peter Watson said during a speech to the Toronto Board of Trade.
The report, titled Canada’s Energy Future, forecasts domestic oil production will grow by 58 per cent and natural gas production will grow 29 per cent between now and 2040, while domestic energy demand grows by just 5 per cent – or less.
In its baseline forecast, the NEB expects “relatively small growth” of Canadian energy demand of five per cent between now and 2040. It also assumes that Ottawa implements a carbon tax as planned.
In an alternative scenario, however, where new energy and technology are adopted at a faster rate amid more stringent environmental policies are in put in place and the carbon tax rises dramatically, Canadians would use 15 per cent less energy overall and 30 per cent less fossil fuels by 2040.
Despite these scenarios, Watson said, “The potential for significant energy production in Canada remains strong — especially for oil and natural gas development.”
The NEB is forecasting a baseline case where Canadian oil production will rise from 4.6 million barrels per day to close to 7 million bpd over the forecast period led by growth from expansions of existing oilsands facilities.
In an interview, Watson said the NEB assumes that new pipelines will be built to accommodate the rising oil production growth from Canadian oil formations but said the board did not make “specific project assumptions.”
Canada’s largest oil producers like Cenovus Energy Inc. and Suncor Energy Inc. have said they won’t sanction new projects to expand their production until new export pipelines are built. The country’s existing pipeline system is full and pipeline operators are rationing space on their lines.
The board envisions price discounts for Western Canadian Select bitumen blend compared with U.S. benchmark crude will remain higher than typical at US$26.30 per barrel in 2020 but will return to a sustained level of US$14 per barrel by 2027.
While oil production rises sharply, the NEB is projecting domestic natural gas production will expand 29 per cent from current production levels of 16.2 billion cubic feet per day to 20.9 bcfd in 2040, thanks to a projected rise in natural gas prices and new liquefied natural gas export facilities.
The board’s natural gas projections may be “a little bit conservative” as they were prepared before Royal Dutch Plc and its partners sanctioned their $40-billion LNG Canada project, NEB chief economist Jean-Denis Charlebois said in an interview.
In addition to new LNG projects, Charlebois said he expects natural gas will make up a larger share of Canada’s power mix between now and the end of the forecast period as gas replaces coal fired power generation.
Natural gas-fired power plants currently produce 22 Gigawatts of power in Canada but that number will rise to 36GW in 2040, Charlebois said.
Under its reference or base case, the NEB predicts total Canadian electricity generation will increase by about 12 per cent from 2017 to 2040, with most of the new sources from natural gas, wind or hydro.
By 2040, the share of non-emitting electricity generation rises to nearly 84 per cent, compared to about 80 per cent now.
With files from TheNewsEditorial