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Deloitte March 31, 2013 Canadian Domestic Oil and Gas Price Forecast Urges Continued Patience

Apr 3 2013 12:00AM




Deloitte's Resource Evaluation & Advisory practice today released its quarterly Canadian domestic oil and gas forecast for March 31, 2013. While the forecast includes a slight bump of US$2/bbl for oil in 2013 and 2014 to reflect near-term price movements, the WTI longer-term outlook remains relatively unchanged at US$88/bbl for 2015 and 2016, settling to US$85/bbl from 2017 through 2021.

"Significant drilling for oil in the U.S., along with a lack of infrastructure and permits to export these volumes, has resulted in some North American oversupply in the past year," said Andrew Botterill, Senior Manager, Resource Evaluation & Advisory, Deloitte. "With no significant export solutions on the horizon, we don't expect to see much long-term change in oil futures pricing."

When it comes to natural gas, Botterill and the Deloitte forecasting team are cautiously optimistic about long-term prices. Withdrawal through this winter has reduced storage volumes closer to the five-year average, resulting in a slightly higher near-term natural gas price. Deloitte's forecast shows an Alberta AECO real price of C$3.35/Mcf in 2013, rising to C$3.70/Mcf for 2014 and $5.20/Mcf by 2021. Deloitte's forecast NYMEX price is US$3.65/Mcf in 2013, rising to US$4.00/Mcf in 2014 and US$5.50/Mcf by 2021.

"With major U.S. markets expected to move toward natural gas for power generation, long-haul trucking and fuel for rail transport, we believe we may see a gradual rise in the natural gas price," Botterill explained. "The establishment of LNG export terminals, now being discussed, would also help to give the currently depressed natural gas price a longer-term boost."

Deloitte's March 31, 2013 forecast commentary also includes an adjustment in the pricing ratios for NGLs (Natural Gas Liquids). Rather than using the five-year average as in the past, Deloitte NGL ratios now more accurately reflect emerging industry trends and the economic importance of NGLs in North American shale gas plays. Butane price differentials remain virtually unchanged for this forecast period. With the demand constraints and price erosion in propane continuing, Deloitte has decreased its propane price forecast from 55 per cent of Edmonton Par Oil to 40 per cent for 2013 and 2014, which is more consistent with the last 12 months. Perhaps most interesting for Canada, said Botterill, is that the price differential for pentanes plus has been adjusted to a premium of 115 per cent of Edmonton Par Oil in order to reflect the growing demand for pentanes plus as a diluent that allows oil sands bitumen to meet pipeline requirements.

For Deloitte's complete oil and gas price forecast dated March 31, 2013, visit

About Deloitte

Deloitte, one of Canada's leading professional services firms, provides audit, tax, consulting, and financial advisory services. Deloitte LLP, an Ontario limited liability partnership, is the Canadian member firm of Deloitte Touche Tohmatsu Limited. Deloitte operates in Quebec as Deloitte s.e.n.c.r.l., a Quebec limited liability partnership. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

Gord Hawker
On behalf of Deloitte
403-984-3707 ext. 201

Jeannie Tsang

Source: Marketwire

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