2017 is getting mixed reviews when it comes to the success of the oil and gas sector.
Founder and CIO of Auspice Capital Advisors Tim Pickering tells Mix News this was a ‘positive year’ with oil prices nearing $60 per barrel.
Some of the big reasons for the increasing numbers include lower U.S. inventories and higher crude exports.
“Over 40 per cent of the foreign supply that comes into the U.S. comes from Canada – right now, we have a situation where Canada is ramping up production and in all likelihood could become the fourth or fifth largest producer in the world by the end of 2018.”
Another big reason for the increase in production was the OPEC cuts. Pickering says he expects the production cuts to continue into mid-2018 – after that, it could go either way.
“I think there’s less confidence in the commitment going forward.”
The last 12 months also saw ups and downs when it came to pipelines. Big projects such as Kinder Morgan’s Trans Mountain Pipeline and the Keystone XL Pipeline are moving forward while the Energy East Pipeline was canceled.
Pickering says there’s lots of optimism when it comes to Trans Mountain and Keystone.
“I think we all have to be realistic in terms of the timeframes – none of those things are going to happen overnight – (they) are a couple years away at the very least and it’s good to see there’s a positive step forward but we’re are a long way from that solving our dilemma.”
That dilemma Pickering notes is Canada’s poor job of managing infrastructure for their resources.
Over the next 12 months, he sees prices continuing to rise – possibly as high as $65 per barrel or higher if the momentum continues.
One company isn’t feeling the same when it comes to success over the past 12 months.
President and CEO of the Canadian Association of Petroleum Producers Tim McMillan believes this was a challenging year which included many wins and losses.
“We’re still struggling with competitiveness and our ability to attract capital – we see some of the big projects which were started several years ago coming to completion, that’s a good thing.”
Now that different projects are ending and less are starting, McMillan notes there will be fewer construction jobs coming to Fort McMurray.
As for oil prices, McMillan believes they are also starting to stabilize becoming a big positive for the sector, however, this might not be the same in 2018.
“The one thing we are seeing is the differential is widening again, though the world price may be stable or rising – as we increase production in Fort McMurray, we’re getting less per barrel because we have less pipeline capacity to get it out.”
What didn’t help was the cancellation of the Energy East – a move which McMillan says he was really disappointed with.
“Connecting Canadians with their own resources makes a lot of sense, having access to an eastern port is crucial to us and without Energy East that looks unlikely in the medium term.”
Trans Mountain and Keystone were noted as being positives for the year.
“I think it’s always a good thing to see Canadian companies stepping up and taking a larger share but it does send a signal when we see the international companies that have optionality around the world picking projects in other jurisdictions as their priority.”
Overall, McMillan notes there were a lot of struggles but many positives heading into 2018.
“We’re seeing a growth in global oil demand that’s as solid as we’ve seen really at any time in history.”
Listen: On this edition of Fort McMurray Matters, Founder/ CIO of Auspice Capital Advisors Tim Pickering and President and CEO of the CAPP Tim McMillan discuss the impact last 12 months had on the oil and gas sector and what to expect in 2018 #ymm #rmwb https://t.co/J2seloLTl3
— MIX 103.7 News (@Mix1037FMNews) December 28, 2017