Canada has the potential to attain energy superpower status, says the latest PwC Canada Energy Report.
That’s because it has a vast reserve base and has spearheaded many advances in technology. Also, Canada’s bitumen production could reach about 5.7 million barrels a day by 2025.
The report focuses on price realization, as well as the country’s external geopolitical influence, efficient domestic policy environment and technology capacity.
“Canada ranks third in global reserves in terms of strength in liquids,” says Reynold Tetzlaff, PwC Canada’s national energy leader.
He adds, “We also have the technological capacity to extract conventional and unconventional oil and gas. However, having the resources and the ability to use them is only part of the superpower equation. We also need access to the global market, with our ability to use our petro-strength able to make an impression on global hydrocarbon markets.”
So far, Canadian producers have been unable to secure optimum prices for their output, the report notes. It finds the country could become a major international crude player, but it would first need to increase capacity to move synthetic crude and bitumen to the west coast for exports to Asia.
Also, Tetzlaff says, “A pipeline corridor [could] facilitate exports to Europe and other countries.”
According to a separate study noted by PwC, Canadian producers should become significant suppliers of crude oil to the Pacific Basin once pipelines to the Pacific are set.
Making a global impression
“Canada is a geopolitical middle power, which [may] constrain the impact of our emerging energy…status relative to countries like China, the U.S. and Russia,” says Robert Johnston, director of Eurasia Group’s global energy and natural resources practice.
He adds, “Similar to our middle power peers—Brazil, Australia and Norway—we should be able to link energy trade and investments with other aspects of our economic agenda.”
Further, Michael Levi of the Council on Foreign Relations, finds, “There are only two levers Canada could use on the international stage. The first ties opportunities to invest in Canada’s resources to other countries’ behavior, and the second looks at [whether Canada can] tie [its] exports of Liquefied Natural Gas to North American gas prices, which would steer the world towards a more market-based gas trade.”
Working things out at home
The reports finds the structure of Canada’s energy sector—provinces control resource ownership, while the federal government holds regulator levers for exports—could potentially hold the country back from becoming a major energy provider globally.
“The struggle to achieve consensus on how to capitalize on our strong Canadian resource base amongst the provinces is costing Canada billions of dollars,” says Tetzlaff.
He adds, “While natural resources are under provincial control, oil and gas is a national matter. We need all regions to work together to build our energy presence on the world stage and as a nation decide where we want to stand.”