The fossil fuel slowdown means Canada has no need for new pipeline capacity, according to an independent analysis of the Canadian Association of Petroleum Producers (CAPP)’s 2015 Crude Oil Forecast.
The conclusion is particularly significant because the forecast isn’t based on computer models, but rather on the development plans Canadian fossil producers reported in a CAPP survey.
The forecast shows two scenarios, one for slower and the other for more vigorous growth in fossil fuel production. In the slower-growth scenario, Canada can move all its output to market without the Keystone XL, Northern Gateway, Trans Mountain, or Energy East pipelines, notes Barry Saxifrage of Visual Carbon.
“Does this mean Canada can avoid the festering and increasingly acrimonious pipeline wars?” he asks. “Have we hit peak oil mega-pipeline? The answer, obviously, depends on whether these slower-growth plans of the oil industry become reality,” but “this looks increasingly likely to be the case.” To say the least.
That’s because many of the assumptions in the slow-growth scenario—which still foresaw a one-third increase in bitumen production—have been overtaken by market realities. When the scenario was taking shape in early 2015, oil was selling for US$60 per barrel (compared to $27.94 earlier this week, with analysts projecting prices as low as $20). U.S. President Barack Obama had not yet rejected Keystone. Alberta hadn’t announced its 100-Mt cap on tar sands/oil sands emissions, And the Paris Agreement “was still far in the future and decidedly uncertain as to outcome,” Saxifrage writes.
“Even back in the much more favourable environment of early 2015, those slower-growth plans were a plausible, industry-defined, future. Now, with decidedly more hostile headwinds for bitumen expansion, [the slower scenario is] looking remarkably like business as usual—if not wishful thinking.”
Saxifrage says the narrative in the forecast doesn’t fully reflect the reality in the data.
“You won’t find any hint in CAPP’s report that big new pipelines might not be needed,” he writes.
“Instead, they say all four of the big proposed pipes are required to meet the highest-growth scenario. A marketer’s job, after all, is to maximize demand for their product. What they don’t discuss is how many pipelines will be needed for the slower-growth plans,” much less a future in which a go-slow scenario from early 2015 far exceeds what the market will bear.
