Deferred and cancelled oilsands projects could result in 300,000 fewer barrels a day flowing from northeast Alberta by 2017, the Canadian Association of Petroleum Producers (CAPP) said Friday.Indeed, two Canadian companies have trimmed 2009 cap-X by over $3 billion. Experts still predict Canadian oil sands production increasing from 1.3 to 2.0. million barrels/day by 2011--but the investment slowdown means that Canada will fall short of the 3.0-3.5 million barrels/day that had been forecast by 2015.
The industry association expects oilsands spending to drop more than 25 per cent, to $16 billion in 2009 from a previous estimate of more than $20 billion. Overall upstream spending - including the East Coast offshore - is expected to fall about 15 per cent to $43 billion from $50 billion in 2008, said Greg Stringham, the group's vice-president of markets and fiscal policy.
A day after Total Canada withdrew a regulatory application for the 115,000-barrel-a-day Northern Lights project, CAPP may be forced to trim its long-term production forecasts for the oilsands when it conducts its annual survey in February, he added.
"Clearly we're on our base case, moderate growth position," Stringham.
Hit by a trifecta of falling oil prices, soaring costs and the lingering fallout from the financial crisis, big oil and gas producers are slamming the brakes on spending to preserve cash and strengthen balance sheets while they weather the ongoing financial storm engulfing the world economy.
This, of course, is the dilemma of both new fossil fuel fields and alternative energy development: Pumping crude from under Arabian and Iraqi deserts costs under $5/barrel; oil sands/shale, new off-shore drilling, and all renewable sources costs well more. Falling oil prices--or, what is the same thing, increased OPEC production quotas--can wipe-out alternative capital investments at a stroke.
This, I think, is the principal energy market failure, and the sole area where (departing from MaxedOutMama) I support government intervention. Not a gas tax, but perhaps forward government energy purchases to keep energy projects active during periods of falling crude prices. It's better than rooting for the OPEC cartel to cut supply.
(via Instapundit, FuturePundit)
3 comments:
As one who generally hates taxes it pains me to say this, but I think an increase in the federal gas tax is justified, as I've written. It would create a strong incentive to consume less, it would encourage production of more efficient vehicles, and it would perhaps replace other forms of more noxious current or future taxation.
I've lived in Europe off and on for many years, and the world doesn't end if gas taxes are high. People adjust to that economic reality just like any other.
The regressive nature of higher gas taxes can be offset, at least in the early years, by rebates, especially for small businesses.
Like it or not, I think this is an idea whose time has come.
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Oh, gimme a friggin BREAK. >:-(
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As long as world gas is low, it makes SENSE for us to buy it, while maintaining that supply in reserve for later on, when it will be worth a HELL of a lot more.
And as tech developments have shown, possibly even cheaper to get out of the ground.
Pushing for development of more expensive-to-recover oil now, when there is a negative cost benefit, is foolish, if not downright stupid. It was just as stupid back in the 70s when Carter's Energy Department spent billions in developing these same sources only to see the magic of the supply-demand free market (as well as the tendency of members of monopoly cartels to violate their own agreements) throw all that development effort mostly to complete waste.
Going after ANWR and coastal oilfields, which is no more expensive than any other oil, is one thing. Going after oil which has special extraction techniques required is quite another.
Leave the damned system alone.
The mechanisms in place controlling price are far too complex to "fix" by hand.
You'll be seeing $4 a gallon again, soon enough, dammit
A lot sooner than you'll be happy about, I'd wager.
The current low prices are a temporary thing. When we need to develop those areas is when they AREN'T.
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Carl - It was a hunt, but I found it. Iowahawk's Why I Am A Democrat:
I am a Democrat because I believe in the environment and conservation. For instance, we must raise the price of gasoline, like they do in Europe, to increase conservation. If we don't, there will soon be a big gas shortage, and this will mean higher gasoline prices for you and me.
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