Page 10 - NorthAmOil Week 46

NorthAmOil COMMENTARY NorthAmOil

The CAODC sees
progress on pipeline
projects as helping to
boost activity next year.

($1.3bn) grant for well reclamation, suggest Canada’s oil and gas wells.
2021 activity should modestly improve from the Nonetheless, there is still uncertainty over
2020 collapse,” the CAODC said in a November whether conditions will now begin to improve
18 statement. or whether it is possible that things will worsen
The group added, however, that if these pro- further still. COVID-19 cases are anticipated to
jections play out, 2021 would still be the sec- rise during the Northern Hemisphere’s winter,
ond-worst year in the Canadian oil and gas and while mass global lockdowns like those seen
industry’s modern history, as various challenges in March and April are unlikely, with localised
linger even if the pandemic is beaten back. measures a more appealing option to govern-
“The market volatility and uncertainty will ments juggling public health and economic
persist, and several factors hang in the balance,” concerns, further restrictions could still dent
says the CAODC’s president and CEO, Mark demand.
Scholz. “The prospects for an effective COVID- Meanwhile, oil prices rose recently on posi-
19 vaccine are promising, but the impact of the tive news from trials of vaccines that could soon
pandemic on energy demand in 2021 and access be available, but these still require approval and
to capital for our members and their customers vaccination programmes will take time to roll The CAODC’s
remain a challenge.” out. On top of this, questions remain over how
Scholz added that it was “critical” that OPEC lasting immunity from the vaccines will be. forecast paints
and its allies in the OPEC+ group maintain Despite this, though, the fact that the world a bleak but
supply discipline during this period of demand is figuring out ways to combat the virus bodes
shocks. But while it is in the OPEC+ coun- well for future demand – and even if there are cautiously
tries’ own interests to do so, this cannot be future outbreaks, they will likely be easier to
guaranteed. bring under control. hopeful picture
Canada will be hoping that these develop-
Optimism, pessimism ments bode well for demand for its oil. However, of 2021 as a
The CAODC’s forecast paints a bleak but cau- even if the world manages to beat COVID-19 potential starting
tiously hopeful picture of 2021 as a potential and new Canadian pipeline projects are com-
starting point for a recovery. Not all in the indus- pleted, oil demand faces a growing threat from point for a
try share this limited optimism, however. In late the energy transition. More and more countries
October, the Petroleum Services Association of are setting long-term net-zero emissions tar- recovery.
Canada (PSAC) released its own oilfield activ- gets, including giant energy consumers such as
ity forecast for 2021, which projected that 2,600 China. Given that Canada’s oil sands producers
wells would be drilled next year, down 8.8% y/y had been targeting Asia as a potential market
from an anticipated 50-year low of 2,850 wells for its output – which serves as rationale behind
this year. the Trans Mountain expansion project in par-
It is worth noting, however, that the two ticular – this long-term decarbonisation effort
organisations use different methods to count complicates the picture.™

P10 www. NEWSBASE .com Week 46 19•November•2020