So here I sit comfortably ensconced in the luxury of a Via Rail trip from Montreal to Toronto on Canada Day and I am thinking that in honour of this prestigious day, it might be useful to review some basic oil and gas statistics about the Canadian energy industry. A lot of this is familiar ground but worth repeating.

Reserves – Oil

• Canada is home to the third largest reserves in the world behind only Saudi Arabia and Venezuela at 176 billion barrels of oil, the majority of which are located in the oil sands in Alberta (this compares to the United States’ reserves of about 37 billion barrels)
• From this massive reserve, Canada produces a fairly modest 3.5 million barrels per day, especially as compared to the United States current production of about 9.5 and Saudi Arabian production of about 10.3. This production ranks Canada 5th in the world
• The majority of Canada`s oil is exported into the United States, where Canada is the number 1 supplier of imported oil, having long since supplanted the Middle East, Venezuela and Mexico

Reserves – Gas

• Canada is home to approximately 72 Tcf of proved natural gas reserves, however the estimates for `recoverable`natural gas are much higher, in the order of 1,400 Tcf. On a world-ranked basis, the proved reserves place Canada a distant (17th), but the recoverable reserves place it in the top 5, displacing US proved reserves and making Canada a natural gas powerhouse. The majority of the recoverable natural reserves in Canada are located in Alberta and British Columbia. These recoverable reserve numbers help make the case for the number of LNG plants proposed for the West Coast.
• Regardless of reserves, Canada is currently the 5th largest producer of natural gas in the world and the 4th largest exporter, with all of these exports heading to the Untied States

The message here is that Canada punches well above its weight in terms of energy reserves and production and is well placed to be a major contributor to the world energy mix in the future, notwithstanding the current price uncertainty. Taken a step further, this speaks volumes to Canada’s potential especially relative to US tight oil, specifically where the one is projected to peak and decline by 2020, the other’s reserves have barely been tapped.

Prices as at July 2*, 2015 (June 26, 2015)
*Note that markets were closed on Friday July 3 for US Independence Day

• WTI Crude: $55.52 ($59.61)
• Nymex Gas: $2.770 ($2.754)
• US/Canadian Dollar: $0.7953 ($ 0.8118)

Highlights

• It was anb ugly week as the price of oil fell due to a number of factors including the unfolding fiscal crisis in Greece and a series of negative news items for supply and production
  • Storage posted a surprise increase
  • Production decreased marginally during the week while OPEC production numbers continue to grow.
  • Traders continue to await the much anticipated production drop-off in the US
  • The rig count registered a small bounce back. Media and markets seized on this as an indication of companies electing to drill again because of price, which may have a kernel of truth, however there are many factors putting rigs back to work including expiring leases and tax breaks
• Natural gas rallied but ended relatively flat on the week on the basis of lower staorage injections
• As of June 26, 2015, US natural gas in storage was 2577 billion cubic feet (Bcf), which is 1% above the 5-year average and about 35% higher than last year’s level, following an implied net injection of 69 Bcf during the report week. Overall U.S. gas consumption decreased by 3.2% this week, with an decrease in power-sector consumption of 5.5% leading the way.
• As at June 26, 2015, US Crude oil supplies were at 465.4 million barrels, a surprise inrcrease of 2.4 million barrels from the previous week and 80.5 million barrels ahead of last year.
• The number of days oil supply in storage was 28.2, ahead of last year’s 24.5.
• Production decreased to 9.585 million barrels per day from 9.604, with a slight decrease in the lower 48
• Oil rig count at June 19 was up to 640 from 628 the week prior, the first increase since November of last year.
• Natural gas rigs drilling in the United States fell this past week to 219 from 228.
• As of June 29, the Canadian rig count was up to 136 (18% utilization), 82 Alberta (15%), 14 BC (17%), 39 Saskatchewan (30%), 1 Manitoba (6%)). Utilization for the same week last year was 34%.

Drillbits

• On vacation currently so getting the Eastern Canadian perspective on things. Much of the discussion seems to be of the “what the heck’s happening in Alberta” variety and centered around real estate prices and the new NDP government
• GDP stats for Canada for April were released showing a surprise contraction of -0.1% (the fourth month in a row), which of course is spurring talk of recession and the implications of that for the uppcoming Federal election. While that remains to be seen, it is an interesting lesson across the country of the importance of the energy and mining sector and its contribution to overall economic growth absent the consumer sector.
• Crescent Point announced a deal to acquire Coral Hill Energy, furthering its strategy in the Swan Hills area of Alberta
• Cenovus Enery announce a deal to sell Heritage Royalty Limited Partnership to Ontario Teachers’ Pension Plan for $3.3 billion
• Stampede started on Friday. Can anyone tell me why Stephen Harper insists on wearing a black hat?