Will Canada become an energy superpower?

PwC’s Energy Visions Forum and report discuss Canada’s presence on the global energy stage

CALGARY, May 29, 2013 — With a vast reserve base, advances in technology, and Canada’s bitumen production estimated to reach nearly 6.5 million barrels a day by 2025, Canada has the potential to attain energy superpower status, according to the latest PwC Canada Energy Report — Unlocking Canada’s oil and gas industry — is Canada becoming an energy superpower?

An energy superpower can be defined by a country’s ability to excel in various areas. The report focuses on price realization, external geopolitical influence, efficient domestic policy environment and technology capacity.

“Canada ranks third in global reserves in terms of strength in liquids. We also have the technological capacity to extract conventional and unconventional oil and gas, but having the resources and the ability to use them is only part of the superpower equation,” says Reynold Tetzlaff, PwC Canada’s National Energy Leader. “We need access to the global market and our ability to use our petro-strength to make an impression on global hydrocarbon markets is essential.”

Regarding access to global markets, Canadian producers are unable to secure optimum prices for their output, the report notes. “Canada could become a major international crude player, but it needs to increase capacity to move synthetic crude and bitumen to the west coast for exports to Asia and a west-to-east pipeline corridor to facilitate exports to Europe and other countries,” says Tetzlaff.

In the report, PwC references a study, Energy 2020: Independence Day by Citi Research, which indicates that once pipelines to the Pacific are set, Canadian producers should become significant suppliers of crude oil to the fastest growing market in the world — the Pacific Basin.

Making a global impression
Robert Johnston, Director of Eurasia Group’s Global Energy and Natural Resources practice, believes Canada has a level of influence among other producing and exporting nations.

“Canada is a geopolitical middle power, which should constrain the impact of our emerging energy superpower status relative to countries like China, the U.S. and Russia,” says Johnston. “Similar to our middle power peers, Brazil, Australia and Norway, we should be able to link energy trade and investments with other aspects of our economic agenda.”

Michael Levi, a David M. Rubsenstein Senior Fellow for Energy and the Environment at the Council on Foreign Relations, adds “There are really only two levers Canada could use on the international stage. The first ties opportunities to invest in Canada’s resources to other countries’ behavior. The second looks at making a deliberate decision to tie Canadian exports of Liquefied Natural Gas (LNG) to North American gas prices, which would steer the world towards a more market-based gas trade.”

Working things out at home
According to the report, the underlying Canadian structure — provinces control resource ownership, while the federal government holds regulator levers for exports — could be seen as one of the potential hurdles to Canada achieving energy super power status.

“The struggle to achieve consensus on how to capitalize on our strong Canadian resource base amongst the provinces is costing Canada billions of dollars,” says Tetzlaff. “While natural resources are under provincial control, oil and gas is a national matter. We need all regions to work together to build our energy presence on the world stage and as a nation decide where we want to stand.”

The report “Unlocking Canada’s oil and gas industry – is Canada becoming an energy superpower?” was released today by PwC at the 4th Annual Energy Visions Business Forum in Calgary, Alberta. PwC’s Energy Visions program is a series of publications and events that provide context around issues affecting the oil and gas sector. For more information and a copy of the report, please visit www.pwc.com/ca/energyvisions. The copy of the report is also available from the media contacts.

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