Like a dinner guest who doesn't quite know when to leave, oil and gas might be sticking around a little longer than expected.
Driving the news: Exxon Mobil’s move to acquire Pioneer Natural Resources for US$59.5 billion is welcome news for the Canadian oil industry, according to experts. Per The Globe and Mail, it's a sign the company is confident that the global demand for oil will stay strong.
- Canada's oil production is set to jump by about 10%, or 500,000 barrels, over the next year to become one of the largest sources of increased supply around the world.
- Down the line, production could be influenced by the Trans Mountain pipeline expansion and a return to production for the Terra Nova oil field in Newfoundland.
Why it matters: Canada’s economy is still heavily reliant on oil, with Crude oil making up ~15% of Canada’s exports and almost 10% of its GDP. Despite talk of the green transition, Exxon Mobil is betting that oil demand will stay high at least for the next 10-15 years.
Yes, but: There are still a lot of question marks about how soon and how drastically the energy transition to renewables will affect global oil demand. The International Energy Agency recently projected that it expects the need for fossil fuels to peak by 2030.
Bottom line: Canada’s transition to renewables is ongoing, and by some estimates, the shift away from fossil fuels could be lucrative for the economy as well, but for the time being, Exxon’s acquisition shows that there’s still a lot of short-term money to be made.—LA