A Bright Future With $100 Oil Lies Ahead for Canada's Offshore Industry: Analyst

Audun Martinsen says the worst of the oil slump seems to be over

While much speculation has been aimed at the benefits of oil potentially climbing to $60 or $70 per barrel in the near future, a Norwegian expert believes it could climb back to $100 within the next four years – and that this will revitalize Canada's offshore exploration industry.

Audun Martinsen, vice-president of the independent consultancy Rystad Energy, told delegates at the 2016 Newfoundland Ocean Industries Association conference in St. John's, Newfoundland that the worst of the oil slump seems to be over, and that considering market highs and lows are normal it is "inevitable" that a return to $100 or more per barrel is forthcoming.

But he warned that a "field-by-field analysis" has been conducted by his company and "it tells us clearly that if we're not investing into new capacity we will not meet the demand that the world has for oil."

He added, "What we clearly see is that the low oil prices has taken down the activity too much, that we're currently under-shooting the demand."

Should his rosy outlook prove accurate, Martinsen pointed out that deep water frontier prospects will be developed and "create a lot of jobs and a lot of revenue for this region"; as for recent discoveries such as Bay du Nord, he remarked, "With our projection we will see much more activity and actually all the potential field developments will go through."

To support his argument that a turnaround is impending, he cited Statoil's decision to conduct an aggressive drilling campaign in the Flemish Pass as a sign that major companies are eager to invest in Newfoundland's offshore: "It's clear they will prioritise this: they are an offshore developer, so they will go through with that project, more likely into the early 2020s.

"it will be a bright future."

For his part, Newfoundland and Labrador premier Dwight Ball, whose province has seen royalties from three offshore fields slump to about half a billion dollars this year, says he'd be much happier with three digit oil  and told delegates he doesn't check the temperature when he wakes up in the morning: instead, he checks Brent prices.

In December, Rystad was one of several consultancies that went on record with research showing that the low cost, over supplied oil market could be turned around within the next few years.