Canada’s oil production will rise over the next decade before starting to decline as countries around the world curb greenhouse gas emissions.
Oil output from Canada will rise to 5.8 million barrels a day by 2032, from five million this year, and then decline to 4.8 million barrels per day in 2050, according to a report issued by the Canada Energy Regulator.
An impending decline in oil exports poses a challenge for the Canadian economy. Canada is the largest foreign oil supplier to the U.S. and has the world’s third-largest crude reserves locked in its Alberta oil sands. The oil and gas sector currently accounts for 5% of Canada’s economy.
The projections by Canada’s energy regulator are based on countries continuing to strengthen measures to fight climate change, which will contribute to Brent crude oil falling to $40 U.S. a barrel by 2050 from this year’s annual average of $68 U.S. a barrel.
Should climate change measures be less stringent, Canadian output will plateau at 6.7 million barrels a day in 2040 and Brent crude oil will average $70 U.S. a barrel through the projection period.
The report warned that much more ambitious carbon-reduction plans, in line with the International Energy Agency’s 2050 net-zero scenario published earlier this year, could lead to “significantly lower” Canadian production levels than what are currently projected.
Canadian energy producers have proposed plans to zero out emissions from their facilities, mostly by extracting and sequestering carbon underground, but they’re seeking the government to fund as much as 75% of those schemes.
Canada’s own energy consumption will decline over the next 30 years and grow increasingly cleaner, the regulator said. Total primary energy use is expected to drop 21% by 2050 and fossil-fuel consumption that is not abated with carbon-capture methods will fall 19% by 2030 and 62% by 2050.
Natural gas output in Canada will remain near current 15.5 billion cubic feet a day through much of the next two decades before declining to 13.1 billion cubic feet a day by 2050. An increasingly larger portion of the country’s gas will be exported in liquefied form, with nearly 40% shipped abroad as liquefied natural gas by 2050.
Canada’s first LNG plant is being built in British Columbia and is scheduled to start operating in the first half of this decade. LNG exports will allow B.C. to surpass Alberta as Canada’s largest natural gas producing province by 2028.