Back to Main

Market Chatter: Canada's Oil Sands Continue to Face Challenges in 2013

By: MT Newswires
Posted: 12/28/2012 11:16:00 AM
Referenced Stocks:

Canada's oil sands will face unprecedented opportunities and massive challenges in 2013 as billions of dollars hang in the balance, the Financial Post reports.

Limited access to foreign markets, infrastructure and labour constraints, and decreasing demand from the United States threaten the $4.93-trillion in revenues that the Canadian Energy Research Institute projects in a best-case scenario over the next 25 years, primarily by selling oil to Asian markets.

The Petroleum Human Resources Council of Canada says the industry will need to fill 9,500 jobs in the next three years, but anticipates that up to 36% of those positions will not be filled.

Western Canadian oil producers, unable to reach Pacific Rim or eastern seaboard markets, are slowing down a number of projects as the industry battles with regulators north and south of the border over infrastructure development, the Post reports.

"There are a lot of investors and companies in Canada that have decided to put oil sands development on hold because they are not able to get it to markets, but more importantly they are not getting a good enough price," Pierre Fournier, a geopolitical analyst at National Bank Financial, told the Financial Post.

Both Suncor Energy Inc (SU.TO). and Canadian Natural Resources Ltd. (CNQ.TO) pulled back on growth in 2012. Suncor will reduce spending by nearly $1-billion in 2013, according to a budget released earlier this month. TransCanada Corp.s (TRP.TO) Keystone XL pipeline, which was denied the permit it needed to cross the U.S. border earlier this year, would provide access to U.S. Gulf Coast refineries if the U.S. State Department approves it next year.

Given the climate of uncertainty, many oil sands developers are breaking up large projects into smaller, more manageable stages to control risk, the Post reports.