Canadian crude industry to lose its key customer by 2040, according to IEA

Oil trade focus will shift ‘decisively’ to Asia, predicts World Energy Outlook 2016

In the words of Smokey Robinson, the Canadian crude oil industry had better shop around.

In its World Energy Outlook 2016, the International Energy Agency (IEA) predicts that United States crude oil imports will fall to near-negligible levels by 2040—as shale oil production and technological innovation, among other factors, make the U.S. virtually energy independent.

The U.S. currently consumes 99 percent of Canada’s crude exports—about 3.76 million barrels a day in 2015, according to the U.S. Energy Information Administration.

The consolation for Canada, says one of the report’s authors, is the expected 30% rise in worldwide energy demand between now and 2040.

“The good news for Canadian oil producers is that oil demand globally is going to increase,” Laura Cozzi, deputy head of the IEA’s office of the chief economist, told an Ottawa audience on Nov. 18. “Even if in the U.S. (oil imports are) going to die, there is going to be many other places on the planet that are continue to need Canadian oil. It’s just that the destination may be different.”

A key consideration is “being able to export it to the global markets, to where it’s going to be needed, and it’s mostly Asia,” said Cozzi.

The World Energy Outlook is the flagship publication of the IEA, which works to ensure reliable, affordable and clean energy for its 29 member countries.

The IEA paints renewables and natural gas as the “big winners” in the race to keep pace with growing global energy demand through 2040, but its WEO-2016 analysis also says that the era of fossil fuels is far from over.

“We see clear winners for the next 25 years—natural gas, but especially wind and solar—replacing the champion of the previous 25 years, coal,” says Dr. Fatih Birol, executive director of the IEA. “But there is no single story about the future of global energy. In practice, government policies will determine where we go from here.”

In other highlights from the IEA’s World Energy Outlook 2016:

• Coal consumption barely grows in the next 25 years;
• LNG will grow to more than half of the global long-distance gas trade by 2040, up from 25% in 2000;
• Meeting more ambitious climate goals will be “extremely challenging” and require a step change in the pace of decarbonization and energy efficiency.

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