Canada oil output threatens to derail Opec plan

30 Jun 2017   Canada, OPEC

As Opec glares at the surge in US shale production that is threatening to derail its attempt to balance the oil market, it may also want to cast an eye north. Canada, home of the world’s third-largest oil reserves, might have seen producers slash capital spending during the three-year-old oil decline, but earlier investments in the country are set to keep pushing output higher for at least the next 18 months. A forecast released this month by the Canadian Association of Petroleum Producers sees the country’s output increasing by 270,000 barrels a day in 2017 and another 320,000 b/d next year. That combined two-year Canadian increase is equal to almost a third of Opec’s production cuts that it made with allies like Russia at the beginning of this year in an effort to raise prices. Kevin Birn, senior director at IHS Markit, says that over the next few years Canadian growth “will only be surpassed by the United States and its tight oil machine,” referring to the US industry’s unlocking of tightly packed oil deposits in shale and similar rocks.

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