Oil companies that are pulling out of the Canadian market are going to get a big windfall.
In fact, the $1.1 trillion worth of production lost to the Canadian oilpatch since 2011, the most recent period for which figures are available, could be up to $500 billion, according to a new study by the Canadian Centre for Policy Alternatives.
“The oilpatch is going to be bigger than it was in 2011,” said Robyn Williams, an economist at the Centre for Economic Policy Research, an organization that studies oil and gas.
She pointed to the fact that production from Canada’s tar sands has doubled since then, with the Canadian Association of Petroleum Producers predicting it could grow by 10 per cent a year.
Williams says it will be the biggest one-time influx of new money to the oilpatch in more than a decade.
And while there will likely be new companies to emerge to fill the void, it won’t be the only one.
Oil and gas companies will still be looking for ways to fill that hole.
“In many ways, the oil and natural gas sector will be a new industry for decades to come, and we should not forget that it was a new sector when it first began,” said Chris Beaudry, a senior economist at CIBC World Markets.
He points out that the U.S. oilpatch, for example, saw its production rise by about 15 per cent over the same period, thanks to shale drilling and fracking.
And it’s not just new players coming to the fray: the Canadian energy sector is expected to generate more than $300 billion a year over the next 20 years, with oil and the gas sector accounting for about $15 billion a piece.
And the boom will only continue.
By 2020, the sector is forecast to account for $50 billion in new revenue, up from $20 billion today.
“We’ve been in this for decades now and the market has been going up,” said Beaudy.
It’s going to have a significant impact on the whole economy.” “
It’s not going to just be a one-off.
It’s going to have a significant impact on the whole economy.”
For a start, the boom could spur investment in infrastructure, a trend that has been well documented.
And there’s another potential driver: higher energy prices.
The cost of crude oil has risen by about 100 per cent in the last decade, and prices for natural gas have also soared.
That could be a boon for the Canadian economy, but the cost of energy in the United States is much higher, and the country could also see a loss of jobs.
“That’s a very real concern,” said Williams.
“This could be very hard to recover.
I don’t think we can look at this as just a one time.”