Deloitte Canada predicts optimism in oil and gas markets despite volatility

Calgary, July 9, 2024 – The combination of infrastructure advancements, increased export capacity, and steady production growth is setting a positive tone in the oil and gas markets for the second half of 2024, according to the latest forecast from Deloitte Canada’s Resource Evaluation and Advisory (REA) group, Making confident decisions in a complex energy landscape.

“Despite factors like a mild winter demand and higher-than-average storage levels, the natural gas sector is poised for significant growth, driven by ongoing LNG projects and rising demand for gas-fired electricity generation in Canada,” says Andrew Botterill, Partner, Energy, Resources & Industrials at Deloitte Canada. “Meanwhile, the oil sector continues to benefit from strategic infrastructure projects like the Trans Mountain Expansion (TMX), which are improving market conditions and supporting production growth.”

While drilling activity targeting natural gas across Canada and the U.S. has decreased by approximately 15 per cent year-over-year, British Columbia has seen drilling activity continue to increase. The primary driver for this increase is the need to develop supply for future LNG export capacity, focusing on the prolific Montney Formation. Also, significant progress is being made on LNG projects off the coast of British Columbia. Several projects are on track to be completed by the end of 2030, with a combined potential export capacity of nearly 6.6 Bcf/day. An additional 2,700 MW of gas-fired electricity generation capacity is expected to come online in Alberta during 2024. This development is anticipated to support long-term demand and stabilize prices.

Canadian oil production is projected to continue growing steadily. The growth is supported by resilient prices for Western Canadian Select (WCS) and Edmonton Light crude, which provide a stable economic environment for producers. The startup of the TMX has helped narrow price differentials, and further narrowing is anticipated as TMX becomes fully operational. This development is expected to enhance market access for Canadian crude and support steady production growth.

While many factors point to an optimistic second half of 2024, continuing to evolve Canada’s energy mix will require careful planning within the entire energy ecosystem. Deloitte’s forecast outlines the challenges posed by the evolving policy landscape and the lack of interconnection between levels of government and industry, hindering effective decision-making.

“Achieving net-zero objectives will require comprehensive planning, integrated analysis, and quantitative approaches that consider the entire energy system,” says Lesley Mitchell, Director, Resource Evaluation and Advisory at Deloitte Canada. “The monumental scale of investment needed demands robust decision-making tools to unlock capital.”

The July forecast underscores the importance of analytical tools like energy systems modelling to help businesses in the energy sector optimize their net-zero strategies and confidently make informed decisions for a cleaner future.

For Deloitte’s complete oil and gas price forecast and additional details on energy systems modelling, visit this page.

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