Most oil companies have a dedicated team exploring new sources of energy, be it offshore crude, natural gas or any unconventional source. But, the inundating supply of crude from the Alberta oil sands and shale in the U.S. has redefined the scope and financial viability of offshore crude exploration. The official proven crude oil reserve of 170.2 billion barrels puts Alberta’s reserve ranking just below Saudi Arabia and Venezuela’s (Alberta Energy).
But, lately there’s actually been a shift back to conventional crude oil exploration. In fact, one of the largest oil and gas players, Royal Dutch Shell, may sell its U.S. shale gas portfolio after taking impairments to the tune of US$2.1 billion (FT).
Statoil’s announcement this week of a major oil find off Canada’s Atlantic coast offers a refreshing reminder that new technology and high prices of crude are helping to uncover new oil supplies beyond U.S. shale and the Alberta oil sands. The Statoil’s 600 million barrels of crude discovery may appear paltry to Alberta’s vast oil sands, where output is expected to hit 5.2 million barrels a day by 2030, the discovery offers some strategic advantages: Offshore production neatly sidesteps the issue of congested pipelines in landlocked Alberta that have driven down the price of oil sands crude and provides easy access to very promising markets of Europe and India (Reuters). The strategic location of this oil discovery assumes greater pertinence, as Canada looks for broader export markets and the Keystone pipeline project hangs in limbo. The graph created in ZEMA below shows the steep growth in Canada’s crude exports and production since 2009 attributing to increased production from Alberta’s oil sands.
There is no denying the fact that Canada is endowed with an abundance of energy resources and that Statoil’s significant discovery of crude off Canada’s Atlantic coast has boosted the interest of many global oil and gas players in offshore explorations. “The discovery is the biggest in the world since 2010, we are a little bit ahead of the game but expect increased competition,” said Geir Richardson, Vice President of Statoil Canada Exploration (Reuters).
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