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Canada’s multitrillion-dollar engine Study forecasts petroleum industry could pump incremental C$3.6 trillion into GDP over next 25 years, spreading jobs, tax benefits Gary Park For Petroleum News
The anti-petroleum faction in Canada has been given something to ponder, if it has an open mind.
Whatever the industry’s failings — and even the strongest defenders concede there are many — the flip side contains many persuasive arguments relating to job creation and revenue generation.
In a detailed study of the impact, the Canadian Energy Research Institute estimates the oil sands alone could attract C$1.7 trillion in incremental Gross Domestic Product growth in Canada over the next 25 years, translating into 700,000 new jobs, while additional tax revenues could run to C$306 billion.
And those numbers cover only 20 percent of the total investment in the petroleum industry to 2030, with 80 percent going to conventional gas, which will claim the largest chunk of capital outlay, followed by oil development in Saskatchewan and tight and shale gas in British Columbia, LNG facilities, pipelines and offshore production — just some of the industry sectors that can contribute to GDP and employment growth.
When the economic impact of the oil sands is rolled into the entire sector, the projected incremental rise in GDP is C$3.6 trillion and new jobs tally 980,000, while the associated tax revenues are C$429 billion.
GDP contributions significant The 200-page report said that despite the recent flurry of concerns and criticism aimed at the industry’s environmental impact, contributions to GDP can’t be ignored.
The study estimates that C$218 billion will be invested in new oil sands capacity over the upcoming 25 years, compared with the US$240 billion Mexico plans to invest over the next 14 years to stimulate its failing oil industry.
Of the C$1.7 trillion in incremental GDP growth flowing from the oil sands, C$78.1 billion could reach Ontario, where much of the oil sands criticism originates.
When the industry’s total estimated incremental increase of C$3.6 trillion is broken down, Ontario could receive C$144 billion.
Alberta could see investment of C$1.42 trillion, 7.465 million person-years of employment, and generate C$234.9 billion in taxes, of which C$149.6 billion would end up in federal coffers.
Overall, the federal government could get a tax infusion of C$167.4 trillion, with almost C$104 billion being spread among Canada’s 10 provinces and three territories.
CERI estimated that, despite a slowdown in oil sands activity over the next two years while the economy regains its health, oil sands production could still reach 4.3 million barrels per day by 2030, almost quadrupling from current levels.
The study said while that is well short of past projections, mostly targeting 5 million bpd, it is realistic based on the economic downturn and the lasting impacts on the economy.
Other capital projects Aside from the Western Canadian upstream, CERI noted that several other capital projects can fuel the economy, including Enbridge’s Northern Gateway Pipelines which could see 500,000 bpd delivered from the oil sands to the British Columbia coast for shipment to Asia and the United States by 2015; the Kitimat LNG liquefaction project to export gas from British Columbia; a Quebec LNG re-gasification terminal; the Mackenzie Gas project; and EnCana’s Deep Panuke gas project offshore Nova Scotia.
This lineup will need investment of C$23.5 billion and pump an incremental C$60 billion into GDP.
Royalties from Alberta’s Horseshoe Canyon and Mannville coalbed methane formations — whose potential role is often overlooked — could contribute C$7.15 billion or C$286 million a year, compared with oil sands royalties of C$184.6 billion or C$7.4 billion a year, divided almost equally between mining and in-situ projects.
British Columbia’s conventional gas royalties could run to C$21 billion, or C$840 million per year, while shale and tight gas royalties from Horn River and Montney could surge to a combined C$67.82 billion, or C$2.7 billion a year.
Drilling costs over the quarter century are estimated at C$24.6 billion in Horn River, with infrastructure costs reaching C$1.7 billion and 3,684 wells being drilled. Montney drilling costs are projected at C$20.6 billion on 6,269 wells, with infrastructure spending at C$2.9 billion.
GDP impacts from unconventional gas developments in British Columbia could spread C$263 billion across Canada, with B.C. taking the lion’s share of C$240 billion.
Saskatchewan royalties from conventional oil are forecast to contribute C$39.8 billion, or C$1.6 billion a year.
The study did not attempt to calculate the economic benefits of shale gas development in Quebec or oil sands development in Saskatchewan, both in their infancy but seen as strong contenders to help Canada achieve Prime Minister Stephen Harper’s goal of becoming a “global energy superpower.”
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