Industry experts say Biden might not be so bad for Alberta oil after all

An increased drilling forecast, an expected rise in per barrel oil prices and a ‘Biden Bump’. A possible boost to the Canadian energy sector from a recovering global economy and policy decisions south of the border.

CALGARY – An increased drilling forecast, an expected rise in per barrel oil prices, and a “Biden Bump”–could a possible boost be coming for the Canadian energy sector thanks to a recovering global economy and policy decisions south of the border?

The updated projections are for a 29 per cent jump in drilling in 2021 and for oil to sit at around $50 a barrel.

“Saudi and the OPEC plus countries have gotten together and said they want to support oil prices, they don’t want them in the 20s they prefer to see them in the 50s. As we get out of COVID demand could come back in a big way for travel,” said Richard Masson, with the School of Public Policy at the University of Calgary.

“I think the expectations may be somewhat optimistic in terms of when COVID is going to go away the economy is going to go back to the way it was,” said Bob Schulz, a professor at the U of C’s Haskayne School of Business.

But there’s another new variable: U.S. president Joe Biden and his ban on new oil and gas drilling on federal land as well as his push to lower emissions.

“If there’s less US production it makes it easier for prices to move up a little bit and that will help cash flow and more jobs and investment in Alberta,” said Masson.

As for the climate plan, the experts say having the U.S. adopting more green initiatives similar to what Canada has done will help level the playing field.

“It definitely sends a positive signal that hopefully, recovery is underway,” said Elizabeth Aquin, interim President and CEO of Petroleum Services Association of Canada.

“The Trump administration wanted to allow drilling in the Arctic, offshore, Alaska. That’s far riskier from an environmental perspective than what we have with the oilsands so if Biden undoes that and restricts that type of drilling then that would be positive for Canada,” said Schulz.

But it’s still going to be a bumpy ride.

“I think we’re going to still see some consolidation amongst companies. There were some who suffered a lot as oil prices were low through COVID-19 and with too much debt, they’re vulnerable to being merged or taken over and the strong will get stronger,” said Masson.

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