Top 100 book a profit of $17.9 billion in 2010, up 113% from $8.4
billion in 2009
CALGARY, May 17 /CNW/ - Higher oil prices and increasing production in
unconventional oil and gas resources, like shale oil and gas, has
significantly altered the global energy sector—and Western Canada is at
centre stage—according to PwC's latest Canadian Annual Energy Survey report.
The report found the Top 100 Canadian oil and gas producers are more
confident than last year, benefitting from rising crude oil prices and
a stable fiscal regime in Alberta. Cash flow for the Top 100 rose to
$53.1 billion in 2010, up almost 15% from $46.4 billion the prior year.
Capital spending also increased to over $56 billion from about $39
billion in 2009.
Rebounding prices for light and heavy oil also lifted overall revenues.
Gross revenue for oil and gas companies rose 26% to more than $167
billion in 2010 from $132.7 billion in 2009. Combined, the Top 100
booked a profit of $17.9 billion, up 113% from $8.4 billion in 2009.
The revenue of the Top 20 oil and gas operators accounted for about 92%
of total revenues, with Suncor Energy Inc. in first place.
Scott Bolton, PwC's Canadian Energy Leader says, "Oil companies enjoyed
a blockbuster year, while gas producers suffered another rough year in
2010. Unlike crude oil, natural gas prices remained flat as the wave of
shale gas production in the United States kept a lid on North American
Respondents of the survey believe the downturn in the price of natural
gas presents a critical threat to their companies' potential growth in
2011, and viewed it as the top concern for their business within the
next two years. As a result of the downturn in gas prices, about 56% of
respondents said they have reduced gas-directed drilling, and 50% have
altered their energy mix to produce more liquids-rich gas. Others have
shut in gas production or are producing more crude oil (both 37.5%).
Shale bigger focus for foreign investment in Western Oil Sands
During 2010, foreign-based companies acquired more than $17 billion in
Canadian oil and gas assets. Now well into 2011, shale gas players are
also benefitting from an influx of investment. In Q1 2011, foreign
interest was dominated by PetroChina International Investment Company
Ltd's plan to spend $5.4 billion to earn a 50% interest in Encana
Corp's Cutbank Ridge gas assets. Additionally, South African-based
Sasol Ltd. plans to spend over $1 billion to earn a 50% interest in
Talisman Energy Inc.'s Cypress A assets.
Canada leads in oil & gas innovation
Technology has played an integral role in unlocking gas-bearing shale,
tight oil reservoirs and the oil sands of northeast Alberta that were
once uneconomic to produce, according to PwC's report. The survey found
80% of respondents said their companies are using new technologies such
as advanced horizontal drilling and multi-stage fracking to revitalize
light oil plays that were once exploited with vertical wells.
"Just a few years ago, we were looking for ways to cope with the day
when we would run out of conventional gas by planning for LNG
facilities and arctic gas pipelines," says Bolton. "Now, we're trying
to deal with a wave of shale gas production that will be flowing to
market for decades to come. It's remarkable how the industry has
shifted in such a short time period and more change is expected to come
with technological innovation as a key driver."
Indeed, Canadian companies have garnered a reputation worldwide as
innovators in areas such as drilling and completions, sour gas, heavy
oil and oil sands, remote location logistics and environmental
management. "The world looks to Canada's oil and gas industry as a
success story in using new technology to increase production, boost
efficiency and push the envelope of environmental sustainability," says
At the same time, however, the development of these unconventional
resources through technological advances has raised some eyebrows
related to its impact on the environment (greenhouse gas emissions,
damaging water supplies, etc) and how future regulations and policies
will affect operators.
"The Western Canadian oil and gas sector is lacking an integrated
technology, policy and regulatory response to deal with the
environmental, political and socio-economic impacts of unconventional
resource development," says Bolton. "A national energy strategy would
help create a better understanding of Alberta's role in energy
production, how to better capitalize on the markets for our commodities
and the technologies used to exploit them."
About Energy Visions:
This document is published by PwC as part of our Energy Visions program,
a series of publications and events that provide context around issues
affecting the oil and gas sector. This report contains results from an
online survey, conducted by PwC during March 2011, to better understand
issues currently impacting the industry. About 91% of the respondents
fill senior roles within the energy sector (54% in a leadership role;
37% in a managerial role), with the balance comprising employees and
consultants. The majority of respondents (70%) work for exploration and
production companies that produce a mix of natural gas and crude oil.
For more information or to download the full report, visit www.pwc.com/ca/energyvisions.
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