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Foreign investment and production in oil sands tumbles

In total, foreign firms have taken nearly $40 billion out of Canada’s economy by shrinking their oil sands investments which equates to about 1.6% of Canada’s total GDP this year.

New data reveals that foreign firms are cutting their investments and production in Alberta’s oilsands, with many leaving Canada entirely as prices remain low and no new pipelines appear to be coming.

As Canada increasingly becomes an undesirable place to invest, foreign investors are beginning to speak out about the difficulty they face in Canada’s oilsands.

“I think Canada itself creates significant barriers to new investment,” said Satoshi Abe of Japan Canada Oil Sands Ltd.

“Additional investment in Canada will only become attractive once there is sufficient egress of its resources and more certainty around its regulatory processes, which we are clearly lacking.”

A report originally unearthed by the Canadian Press revealed that oil output from foreign-owned firms fell dramatically over the past four years, going from 647,000 barrels per day (b/d) in 2014 to 573,000 b/d in 2018.

Likewise, foreign production in the oil sands slipped from almost 33% in 2014 to 20% last year.

This decrease in production has coincided with major foreign firms withdrawing from the Canadian economy.

In August, True North reported on the exit of a major firm, Kinder Morgan, from the Canadian market. With the Canadian government buying their Trans Mountain pipeline project early this year for $4.5 billion, their exit from Canada was widely expected.

Construction of the expansion to the now state-owned pipeline has yet to begin.

Another major exit was Devon Energy Corp. which sold its Jackfish thermal oil sands project earlier this year. Other companies which have either left Canada or significantly cut investment include Royal Dutch Shell, Equinor, ConocoPhilips and Marathon Oil.

There are now only 12 foreign-owned companies producing oil in Alberta, and many of them do not have significant production. While remaining in the market, these firms are also shrinking their investments.

The largest foreign-owned firm by production, France’s Total SA, sold one of its oil sands project to Canadian Natural Resources Ltd. last year, saying Canada is not a desirable destination for their investment.

“Reducing our exposure to Canada’s oil sands by selling this asset is in line with our global strategy to focus our oil investments on low-break-even resources and develop a resilient portfolio in the mid and long term,” said Total SA CEO Patrick Pouyanne.

In total, foreign firms have taken nearly $40 billion out of Canada’s economy by shrinking their oil sands investments which equates to about 1.6% of Canada’s total GDP this year.

With projects like Trans Mountain, Keystone XL, and the Enbridge Line 3 extension paralyzed by legal and legislative troubles, it’s unlikely any new foreign firms will try to enter the oil sands anytime soon.

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