Energy Accounted For Nearly 20% Of Canada’s Exports, 35% Of Private Sector Investment
13 May 2008  The Daily Oil Bulletin

Although it slipped from 2006 due to lower natural gas prices, the value of Canadian energy exports from the country still added up to a massive $90 billion in 2007, led by higher oil exports at inflated prices.

The energy industry accounted for 19.7% of the value of all Canadian exports last year, said the National Energy Board in its Canadian Energy Overview 2007 report released Monday.

In 2006, the value of all energy exports was $99 billion which represented 22% of all the nation’s exports. Four years earlier in 2002 energy exports only accounted for about 12.5% of the value of all exports but as prices have risen with some growth in export volumes, energy has become increasingly important to the Canadian economy.

Last year, Canada’s energy industry accounted for 5.6% of the country’s Gross Domestic Product (GDP) and the energy sector’s capital investment and investment in repairs reached $68.9 billion, about 35% of Canada’s total private sector investment.

The NEB report said Canada pumped an average of 441,128 cubic metres (2.8 million bbls) of crude oil per day last year, with almost half coming from Alberta’s oilsands. The increase was also due to a 16% rise in East Coast offshore production with improved operational performance at the Terra Nova and White Rose fields.

Conventional light crude oil production in Canada fell by three per cent last year, significantly less than the long term five per cent trend, the Board noted, attributing the improved performance to higher oil drilling as a result of high oil prices. Declines rates are expected to moderate this year as well due to relatively high oil drilling levels and the success of the Bakken play in Saskatchewan.

Oilsands investment jumped 17% last year to $18 billion in 2007.

Canada exported an average of 294,411 cubic metres (1.85 million bbls) of crude oil per day in 2007 worth more than $41 billion, compared to $39.3 billion in 2006. More than half of Canada’s crude oil exports flowed to the U.S. Midwest. Light crude exports represented about 38% of all exports with heavy crude and bitumen accounting for the rest. This year, with much higher oil prices, the value of exports should easily top $50 billion.

Four years ago, before the run-up in crude oil prices and the rise in oilsands production, the value of gas exports exceeded returns from oil exports but that has now reversed.

Canada imports a lot of foreign crude in the eastern part of the country (and then re-exports significant volumes of refined petroleum products), so the net value of exports of oil and petroleum products (exports minus imports) was estimated at $25.7 billion last year, up 18% from 2006.

According to the U.S. Energy Information Administration, Canada supplies nearly 20% of U.S. daily crude oil imports, more than any other nation.

While Canadian natural gas production fell slightly to 475 million cubic metres (16.8 bcf) per day, exports rose 4.4% to 258 million cubic metres (9.1 bcf) per day in 2007. However, the average export price was about five per cent lower in 2007 and therefore the $24.3 billion generated from net natural gas exports was nearly identical to 2006 revenues.

Thus the net gain to Canada from its oil and gas exports (minus import values) was about $50 billion last year.

Canada is a net importer of coal but exports more electricity than it imports. Last year power producers exported about $3.1 billion of electricity and imported about $1 billion worth of electricity. Canadian net electricity exports in 2007 were nearly double the five-year average of 15.7 terawatt hours.

While domestic electricity demand was met in 2007, the report pointed to the need for new or upgraded electricity transmission facilities as a result of Canada’s growing population and economy.

This year, the National Energy Board expects Canadian oil production to increase to about 2.8 million bbls per day, up 2.2% from last year, led by two major oilsands projects – Canadian Natural Resources Limited’s Horizon project and the Nexen Inc./OPTI Canada Inc. Long Lake project, both ramping up volumes this year.