Canada’s oil and gas industry has seen its share of the country’s merchandise exports jump over the past two decades, and energy is now a crucial contributor to Canadian trade and economy.
While the federal government is looking to reduce greenhouse gas emissions by a proposed cap on emissions from oil and gas and additional carbon taxes, facts and figures of the past decade show that energy exports are now nearly a quarter of the value of Canada’s total exports.
This will likely continue to be the case in the foreseeable future, considering the still robust global oil demand, the expansion of the Trans Mountain pipeline, and expected start-ups of Canadian LNG export projects, according to Jock Finlayson, a senior fellow of the Fraser Institute.
Alongside surging production, Canada’s oil and gas exports jumped in the period 2002 to 2022, with export value soaring from US$26.7 billion (C$36.5 billion) in 2002 to US$133 billion (C$182 billion) in 2022 and most of it going to the United States, the Canadian Energy Centre said earlier this year.
In 2002, oil and gas accounted for 9% of Canada’s most exported products. That share jumped to 23% in 2022, making oil and gas the single largest export category.
Canada saw a record-high oil production in 2023 amid expanding oil sands output, data from Statistics Canada showed. Exports in terms of volumes also hit an all-time high last year, rising by 3.2%, although the value has declined somewhat due to lower crude oil and natural gas prices compared to the 2022 highs.
This year, Canadian output of crude and natural gas continues to rise as producers ramp up activity now that they have 600,000 barrels per day (bpd) of additional egress for their crude with the expanded Trans Mountain pipeline. More oil and gas exports are also in the cards in the coming years as TMX is now delivering more crude to Canada’s Pacific coast for export via tankers to the United States and Asia—the most prized export market for any producer.
“With improved access to global markets, Canadians can look forward to receiving higher value for our energy resources, meaning more money coming back into the economy,” Lisa Baiton, President and CEO of the Canadian Association of Petroleum Producers (CAPP), said.
“The completion of the Trans Mountain Expansion will help Canada play an enduring strategic role in ensuring our allies and trading partners have access to a reliable and trusted source of critical energy,” Baiton added.
Combined, crude oil, NGLs, and natural gas exports accounted for roughly 20% of total Canadian exports last year, CAPP said in a presentation earlier this year.
In tandem with the development of Alberta’s oil sands, Canada has steadily grown its crude oil exports, which averaged about 4.2 million bpd in 2023, more than double the 2008 levels of about 2 million bpd.
In its key export market, the United States, Canadian crude has taken market share from Venezuela and OPEC’s Middle Eastern producers in recent years, while Canada is expected to have its first LNG exports in 2025 from the West Coast, with the start-up of LNG Canada Phase 1, CAPP says.
Other LNG projects could also boost Canadian natural gas exports and diversify Canada’s gas customers to the Asian market, compared to the sole market in the U.S. at present.
Last month, the Haisla Nation and Pembina Pipeline Corporation decided to move ahead with the Cedar LNG project, a floating LNG export facility on Canada’s West Coast, and the world’s first indigenous majority-owned LNG project.
Together with another project on the Pacific Coast, Shell-led LNG Canada, Cedar LNG in Kitimat, British Columbia, would be one of the first Canadian export projects and would take advantage of the proximity of the Pacific Coast to the key importing markets in Asia.
These projects are set to boost Canadian oil and gas exports in terms of volumes, while the TMX start-up is expected to boost the price of Canada’s heavy crude oil for years to come.
By Tsvetana Paraskova for Oilprice.com
