sitemap

Context

Canada, the world’s third largest producer of natural gas and the ninth largest producer of crude oil, exports approximately half of its oil and gas production to the U.S. Canada is self-sufficient in natural gas, but imports about 40% of its crude oil into Eastern Canada. Alberta accounts for more than 80% of Canada’s oil and gas production. As such, the energy sector accounts for half of Alberta’s economy, and oil and gas accounts for 19% of its provincial GDP.

The Canadian petroleum industry is divided into three sub-sectors: upstream (more than 1,000 exploration and production companies); midstream (pipelines); and downstream (21 refineries, 16,500 retail outlets, and 2,538 distribution facilities).

Drivers

Increased regulatory pressures – brought about by increased population growth into areas that are actively being developed – are leading to higher costs and demands for greater degrees of protection of public safety and the environment.

Long-term drivers include increased demand world-wide, and decreased labour availability. There is a significant shortage of skilled trades and knowledge workers in the industry, especially in boom areas such as Alberta.

In Eastern Canada the regulatory climate for off-shore exploration is convoluted and cumbersome. Coupled with the high costs of working off-shore, the government-imposed regulatory regimes, both federal and provincial, have reduced the willingness of companies to commit to major expansion of the eastern basin.

Outlook

International demand for petroleum hydrocarbons continues to grow, as the level of reserves of conventional oil supplies decline. As the market economy of China expands, growing demand will place increased pressures on the industry to increase efficiencies and find new sources. The world-wide focus on exploration has started to shift to unstable areas such as Nigeria, Yemen, Columbia, New Guinea, or very remote areas, such as the Arctic. On the supply side, the instability of the Middle East is an ongoing concern.

There will be increased focus on the development of coal bed methane (CBM) and continued exploitation and development of heavy oils through enhanced oil recovery methods.

Changing Client Needs

There are four main upstream regions in Canada, each at a different stage in the industry life cycle. This means client needs vary greatly according to geographic area and stage in the life cycle. What they have in common, however, is an exposure to environmental and regulatory risks and demands from the broader public.

Dillon’s Approach

The success of our oil and gas industry services depends on a deep understanding of their regulatory environment. We maintain such relationships across the country, affording our clients ready access to decision makers.

Recent changes to some companies’ operating philosophies have allowed Dillon to substantially expand our services to the downstream retail sector via program management partnerships, through which we perform most environmental services under a broad mandate; measured in tangible results.

The approach to the sector has been to provide well thought-out solutions in a rapid manner. While the environmental costs may be minor compared to project costs, the consequences of delays and shut-downs are significant.