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Canada remains on the sidelines as global competitors double down on energy projects

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By Deborah Jaremko of the Canadian Energy Centre

From the Taliban to Russia, billions in oil and gas investment underway around the world

As Canada’s oil and gas industry faces the uncertainty of a looming emissions cap and a “Just Transition,” billions of dollars of investment is underway in other countries to grow oil and gas supply for the future.  

Here’s just a handful of examples.

Afghanistan – Amu Darya basin  

US$690 million 

Xinjiang Central Asia Petroleum and Gas Co. 

Afghan Deputy PM Mullah Abdul Ghani Baradar at a news conference in Kabul announcing an oil development agreement with Xinjiang Central Asia Petroleum and Gas Co. Photo: Twitter/Zabihullah Mujahid

In January, Chinese state-owned Xinjiang Central Asia Petroleum and Gas Co. signed a deal with the Taliban-controlled Afghanistan government to invest nearly US$700 million over four years on oil development in the country’s north. 

The 25-year contract also involves building Afghanistan’s first oil refinery.  

The Taliban militant group returned to power in Afghanistan after the withdrawal of U.S. forces in 2021. Its ownership share of the oil project will gradually rise to 75 per cent, according to spokesman Zabihullah Mujahid.  

The Taliban maintains close ties with the terrorist group al-Qaeda, according to the Council on Foreign Relations (CFR). Since resuming its rule in Afghanistan, authorities have resumed public floggings and executions, violently cracked down on protesters and activists, “obliterated” women’s rights, and “enforced prohibitions on behavior deemed un-Islamic,” the CFR says.  

Brazil – Santos Basin 

TotalEnergies 

US$1 billion 

Map courtesy TotalEnergies

France-based TotalEnergies announced in January it will go ahead with a US$1 billion expansion of oil production offshore Brazil. 

The development is located about 300 kilometres off the coast in the Santos Basin. TotalEnergies, which has operated in Brazil for more than 40 years, is 45 per cent owner along with partners Shell, Repsol and Sinopec.  

The project will consist of three new deepwater wells connected to an existing floating production and storage vessel. It is expected to increase production to 60,000 barrels per day in 2025, up from about 35,000 barrels per day today.  

Norway – Norwegian Continental Shelf 

Aker BP 

US$29 billion 

Rendering courtesy Aker BP

Oslo, Norway-based Aker BP and its partners filed formal plans in December for four offshore oil and gas projects on the Norwegian Continental Shelf. 

A total investment of nearly US$30 billion, the developments are expected to increase Aker BP’s oil and gas production to around 525,000 barrels per day in 2028, compared to 400,000 in 2022. 

The company’s strategy is to meet the world’s growing need for energy while simultaneously contributing to reducing emissions, said CEO Karl Johnny Hersvik. 

The projects are enabled by a 2020 government stimulus package that “allowed oil companies to embark upon new commitments,” he said. 

Qatar – North Field East LNG expansion 

Qatar Energy 

US$29 billion

Qatar’s Minister of State for Energy Affairs and QatarEnergy CEO Saad Sherida al-Kaabi (R) and TotalEnergies CEO Patrick Pouyanne announce partnership in the giant North Field East LNG project at the QatarEnergy headquarters in Doha on June 12, 2022. Getty Images photo

One of the world’s largest LNG exporters is expanding its capacity with the largest LNG project ever built.  

State-owned QatarEnergy’s US$29 billion North Field East Expansion will increase the country’s LNG export capacity to 110 million tonnes per year, from 77 million tonnes per year. Startup is expected in late 2024.  

A planned second phase of the project will further increase capacity to 126 million tonnes per year. QatarEnergy’s partners include Shell, TotalEnergies, Exxon Mobil, ConocoPhillips and Eni.  

World LNG demand reached a record 409 million tonnes in 2022, according to data provider Revintiv. It’s expected to rise to over 700 million tonnes by 2040, according to Shell’s most recent industry outlook.  

Russia – Vostok Oil  

Rosneft  

US$170 billion  

Russian President Vladimir Putin and executives with state oil company Rosneft present a major shipbuilding complex to Indian Prime Minister Narendra Modi. India will be an investor in a new US$170 billion oil project in the Russian Arctic. Photograph courtesy Rosneft

Despite the war in Ukraine and wide-ranging energy sanctions, Russian state-owned oil company Rosneft says work continues to advance on schedule for the massive Vostok oil project.  

The US$170 billion project will use the Northern Sea Route to export about 600,000 barrels per day by 2024. Production is expected to increase to two million barrels per day after the second phase.  

Rosneft reports that as of mid-2022, more than 1,000 units of special construction equipment are in operation, as well as seven new Russian arctic class drilling rigs, with another five on the way. Over 4,000 people and 2,000 vehicles have been mobilized.  

“This means that the project lives and develops as planned, the inevitable difficulties are being overcome, but we have full confidence that all the tasks will be completed,” Rosneft CEO Igor Sechin said. 

“In the context of decreasing investment in the oil and gas sector, Vostok Oil is the only project in the world capable to provide a stabilizing effect on the hydrocarbon markets.” 

From the Canadian Energy Centre Ltd. 

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Alberta

Oil and gas in the global economy through 2050

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From the Canadian Energy Centre

By Ven Venkatachalam

The world will continue to rely on oil and gas for decades to come, according to the International Energy Agency

Recent global conflicts, which have been partly responsible for a global spike in energy prices, have cast their shadow on energy markets around the world. Added to this uncertainty is the ongoing debate among policymakers and public institutions in various jurisdictions about the role of traditional forms of energy in the global economy.

One widely quoted study influencing the debate is the International Energy Agency’s (IEA) World Energy Outlook, the most recent edition of which, World Energy Outlook 2023 (or WEO 2023), was released recently (IEA 2023).

In this CEC Fact Sheet, we examine projections for oil and natural gas production, demand, and investment drawn from the World Energy Outlook 2023 Extended Dataset, using the IEA’s modelled scenario STEPS, or the Stated Policies Scenario. The Extended Dataset provides more detailed data at the global, regional, and country level than that found in the main report.

The IEA’s World Energy Outlook and the various scenarios

Every year the IEA releases its annual energy outlook. The report looks at recent energy supply and demand, and projects the investment outlook for oil and gas over the next three decades. The World Energy Outlook makes use of a scenario approach to examine future energy trends. WEO 2023 models three scenarios: the Net Zero Emissions by 2050 Scenario (NZE), the Announced Pledges Scenario (APS), and the Stated Policies Scenario (STEPS).

STEPS appears to be the most plausible scenario because it is based on the world’s current trajectory, rather than the other scenarios set out in the WEO 2023, including the APS and the NZE. According to the IEA:

The Stated Policies Scenario is based on current policy settings and also considers the implications of industrial policies that support clean energy supply chains as well as measures related to energy and climate. (2023, p. 79; emphasis by author)

and

STEPS looks in detail at what [governments] are actually doing to reach their targets and objectives across the energy economy. Outcomes in the STEPS reflect a detailed sector-by-sector review of the policies and measures that are actually in place or that have been announced; aspirational energy or climate targets are not automatically assumed to be met. (2023, p. 92)

Key results

The key results of STEPS, drawn from the IEA’s Extended Dataset, indicate that the oil and gas industry is not going into decline over the next decade—neither worldwide generally, nor in Canada specifically. In fact, the demand for oil and gas in emerging and developing economies under STEPS will remain robust through 2050.

Oil and natural gas production projections under STEPS

World oil production is projected to increase from 94.8 million barrels per day (mb/d) in 2022 to 97.2 mb/d in 2035, before falling slightly to 94.5 mb/d in 2050 (see Figure 1).

Source: IEA (2023b)

Canadian overall crude oil production is projected to increase from 5.8 mb/d in 2022 to 6.5 mb/d in 2035, before falling to 5.6 mb/d in 2050 (see Figure 2).

Source: IEA (2023b)

Canadian oil sands production is expected to increase from 3.6 mb/d in 2022 to 3.8 mb/d in 2035, and maintain the same production level till 2050 (see Figure 3).

Source: IEA (2023b)

World natural gas production is anticipated to increase from 4,138 billion cubic metres (bcm) in 2022 to 4,173 bcm in 2050 (see Figure 4).

Source: IEA (2023b)

Canadian natural gas production is projected to decrease from 204 bcm in 2022 to 194 bcm in 2050 (see Figure 5).

Source: IEA (2023b)

Oil demand under STEPS

World demand for oil is projected to increase from 96.5 mb/d in 2022 to 97.4 mb/d by 2050 (see Tables 1A and 1B). Demand in Africa for oil is expected to increase from 4.0 mb/d in 2022 to 7.7 mb/d in 2050. Demand for oil in the Asia-Pacific is projected to increase from 32.9 mb/d in 2022 to 35.1 mb/d in 2050. Demand for oil from emerging and developing economies is anticipated to increase from 47.9 mb/d in 2022 to 59.3 mb/d in 2050.

Source: IEA (2023b)

 

Source: IEA (2023b)

Natural gas demand under STEPS

World demand for natural gas is expected to increase from 4,159 billion cubic metres (bcm) in 2022 to 4,179 bcm in 2050 (see Figures 6 and 7). Demand in Africa for natural gas is projected to increase from 170 bcm in 2020 to 277 bcm in 2050. Demand in the Asia-Pacific for natural gas is anticipated to increase from 900 bcm in 2020 to 1,119 bcm in 2050.

Source: IEA (2023b)

 

Source: IEA (2023b)

Cumulative oil and gas investment expected to be over $21 trillion

Taking into account projected global demand, between 2023 and 2050 the cumulative global oil and gas investment (upstream, midstream, and downstream) under STEPS is expected to reach nearly U.S.$21.1 trillion (in $2022). Global oil investment alone is expected to be over U.S.$13.1 trillion and natural gas investment is predicted to be over $8.0 trillion (see Figure 8).

Between 2023 and 2050, total oil and gas investment in North America (Canada, the U.S., and Mexico) is expected to be nearly U.S.$5.6 trillion, split between oil at over $3.8 trillion and gas at nearly $1.8 trillion (see Figure 8). Oil and gas investment in the Asia Pacific, over the same period, is estimated at nearly $3.3 trillion, split between oil at over $1.4 trillion and gas at over $1.9 trillion.

Source: IEA (2023b)

Conclusion

The sector-by-sector measures that governments worldwide have put in place and the specific policy initiatives that support clean energy policy, i.e., the Stated Policies Scenario (STEPS), both show oil and gas continuing to play a major role in the global economy through 2050. Key data points on production and demand drawn from the IEA’s WEO 2023 Extended Dataset confirm this trend.

Positioning Canada as a secure and reliable oil and gas supplier can and must be part of the medium- to long-term solution to meeting the oil and gas demands of the U.S., Europe, Asia and other regions as part of a concerted move supporting energy security.

The need for stable energy, which is something that oil and natural gas provide, is critical to a global economy whose population is set to grow by another 2 billion people by 2050. Along with the increasing population comes rising incomes, and with them comes a heightened demand for oil and natural gas, particularly in many emerging and developing economies in Africa, the Asia-Pacific, and Latin America, where countries are seeing urbanization and industrialization grow rapidly.


References (as of February 11, 2024)

International Energy Agency (IEA), 2023(a), World Energy Outlook 2023 <http://tinyurl.com/4nv9xyfj>; International Energy Agency (IEA), 2023(b), World Energy Outlook 2023 Extended Dataset <http://tinyurl.com/3222553b>.

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Canadian Energy Centre

B.C. First Nation buying ‘ready-to-go’ natural gas pipeline to supply LNG project

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Eva Clayton, president of the Nisga’a Lisims Government, speaks during a homecoming celebration for the House of Ni’isjoohl memorial totem at the Nisga’a Nation, in Laxgalts’ap, B.C., Friday, Sept. 29, 2023. CP Images photo

From the Canadian Energy Centre

By Will Gibson

‘It is an opportunity for us to create a better quality of life for our children and grandchildren’

Momentum continues building for Indigenous-led Canadian liquefied natural gas (LNG), with a second project securing a pipeline connection.

The Nisga’a Nation, a small coastal community near B.C.’s border with Alaska, announced earlier this month it will purchase TC Energy’s Prince Rupert Gas Transmission project along with partner Western LNG.  

It’s a turning point for the proposed Ksi Lisims LNG project, particularly because the pipeline has all the permits it needs to go ahead, said market analyst Ian Archer.  

Rendering of the proposed Ksi Lisims floating LNG project. Image courtesy Ksi Lisims LNG

“Buying this asset, a permitted and ready-to-build natural gas pipeline, puts control in the hands of the project’s partners,” said Archer, S&P Global’s associate director for gas, power and climate solutions. 

“The Nisga’a Nation and Western LNG now have control over the timeline and development of their proposed development. It’s a great day for them and the LNG industry in B.C.” 

The purchase comes after years of uncertainty for the proposed 900-kilometre pipeline, which would run from Hudson’s Hope in northeast B.C. to Lelu Island, near Prince Rupert.  

It was originally supposed to supply the $36-billion Pacific NorthWest LNG project, which was cancelled in 2017. 

In 2014, the Nisga’a Nation signed an agreement for construction of the pipeline through its traditional lands. Today, Nisga’a president Eva Clayton says becoming an owner of the project ensures it will provide even greater benefits.  

“This means more training, more priority hiring, more contracts and procurement for our workers and businesses, and more investment in our nation,” Clayton said.  

“It is a historic development, and an opportunity for us to create a better quality of life for our children and grandchildren here in the Nass – and for First Nations all along the pipeline route.”  

Ksi Lisims is a proposed floating facility with capacity to export 12 million tonnes of LNG per year. It is owned by the Nisga’a Nation, Western LNG, and Rockies LNG – a consortium that includes some of Canada’s largest natural gas producers.

Archer, who has spent more than 20 years analyzing the energy sector, sees the partnership as a template for the future. 

“The trend now is Indigenous participation in energy developments is seen as a given as opposed to just engagement or consultation with communities,” he says.  

“There is a recognition by both energy producers and Indigenous communities that they have a vested interest in exploring and participating in partnerships to responsibly develop oil and gas and build critical infrastructure to support that. That trend will continue to grow because it makes sense for everybody.” 

Map of the Prince Rupert Gas Transmission line. Courtesy Impact Assessment Agency of Canada

The momentum is building for Ksi Lisims – which also recently signed on Shell as a long-term LNG buyer and filed its regulatory application for an environmental certificate – hot on the heels of Cedar LNG, another Indigenous-led project on the B.C. coast.  

Cedar LNG, owned jointly by the Haisla Nation and Pembina Pipeline Corporation, has regulatory approval to proceed and is preparing for construction to start. A final investment decision is expected by the middle of this year.  

Cedar’s pipeline is already in the ground. It will be served by Coastal GasLink, a 670-kilometre pipeline from northeast B.C. to Kitimat that was completed late last year 

The project was built primarily to feed the LNG Canada terminal, which is now more than 85 per cent complete 

Less than a kilometre of connecting pipeline – called Cedar Link – would need to be built to get gas flowing to the Indigenous-owned Cedar LNG project.  

Given the appetite for LNG for potential customers in Asia (expected to drive a nearly 70 per cent increase in global demand through 2040), Clayton sees Ksi Lisims as key for providing opportunities for her community.  

For far too long, First Nations could only watch as others built generational wealth from the resources of our traditional lands. But times are changing. Our ownership role in this pipeline signals a new era for Indigenous participation in Canada’s economy.” 

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