CALGARY, May 18, 2017 /CNW/ - Key drivers underpinning capital allocation, market alignments and operating characteristics of the global oil and gas industry are undergoing rapid changes - and creating greater uncertainty in the commodities market. PwC Canada's new report Energy Visions: Who's in Charge launched today in Calgary focuses on key actions the Canadian industry must take to achieve greater agility in this changing marketplace.
OPEC policy changes have affected heavy oil trade flows, according to the report. Up until recently, US shale supply was dependent on prices, actions, and decisions of Saudi Arabia and core OPEC members. But the extreme price volatility and existence of a new significant source of non-OPEC supply (US shale) have challenged OPEC's authority. Lower OPEC exports of heavy sour crude to Asia have driven up prices, making it economically feasible for North American barrels to reach that market.
According to the report, the resilience of US shale under the 'lower-for-longer' oil price environment has been stunning. Even though US production fell from a high of about 9.6 million bpd in April 2015 to about 8.6 million bpd in November 2016, the rate of decline was much slower than many predicted.
"With the new US Administration and a freshly signed OPEC agreement, the outlook is still one of uncertainty for oil and gas. Price volatility continues to be a determining factor that will impact current and future strategies for all industry players," said Reynold Tetzlaff, National Energy Leader at PwC Canada. "The Canadian sector stands at a crossroad where it must balance well managed cost containment, capital discipline, strong sustainability practice, operational excellence and an innovation culture if it wants to survive the lows and excel in the future."
Canadian oil and gas companies aren't ignoring the increasing impact carbon has on their operations or the growing relationship carbon has with attracting and maintaining capital in Alberta, especially in the eyes of international investors. Greater collaboration between government, industry, stakeholders are required to hold Canada accountable to reduce greenhouse emissions while remaining globally competitive.
"The world needs oil and gas and that will not change in the near term. I am confident that Canada, with our technological innovations and ingenuity, and strong environmental standards, is well positioned to build on its position as a global leader within the sector," adds Tetzlaff.
The report was discussed today at the Energy Visions Forum in Calgary. To access the full report, click here.
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About PwC Canada
PwC Canada helps organizations and individuals create the value they're looking for. More than 6,700 partners and staff in offices across the country are committed to delivering quality in assurance, tax, consulting and deals services. PwC Canada is a member of the PwC network of firms with more than 223,000 people in 157 countries. Find out more by visiting us at www.pwc.com/ca.
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