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The Canadian oil sector should expect growth in exploration and production, but its place on the global stage is still uncertain, a trade group said.
The National Energy Board said that, as of July 7, it expected total production of crude oil and equivalent will be 4.05 million barrels per day for the year, which, if the forecast proves accurate, would be about 5 percent higher than last year.
Crude oil prices are up more than $10 per barrel from this time last year and Western Canadian Select, the nation's benchmark for the price of oil, is moving higher in early Tuesday trading, while rival benchmarks lose ground. WCS is trading about $10 lower than West Texas Intermediate, the U.S. benchmark
In its forecast for the year, the Petroleum Services Association of Canada said it expects to see an increase in exploration and production activity for the year. Basing its forecast on $49 per barrel for WTI, the PSAC said it expected 7,200 drilled wells this year, up from its initial forecast of 6,680.
WTI was trading at around $50 early Tuesday. For Alberta, the heart of the Canadian oil sector, the trade group raised its well forecast by 90 percent to 3,604.
PSAC President and CEO Mark Salkeld said the increase in well activity is indicative of an industry learning to do more with less.
"The cost reductions from the services sector demanded by their customers are also still playing a significant role in helping with activity levels enabling exploration and production companies to drill more wells at less cost," he said in a statement. "The downside to this is that slim services sector margins mean less funds available for new research, development and innovation."
Canada is largely landlocked as an oil producer and sends nearly all of its exports to the United States. Canada, however, is courting the expanding economies in Asia as a way to expand its options. In an early July survey, the Canadian Association of Petroleum Producers said Canadian oil should be shared with the world.
"Canada continues to struggle with its place in the world of energy supply given our lack of access to tidewater and public support for infrastructure," Salkeld said.
In early January, the government signed off on plans from pipeline company Kinder Morgan to triple the capacity of its Trans Mountain pipeline to the western coast to around 890,000 barrels of oil per day.
Last week, however, Malaysia energy company Petronas said weak market conditions mean it could no longer pursue a liquefied natural gas project for a port in British Columbia.
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