Issue link: http://resourceworld.uberflip.com/i/581931
o c t o b e r / n o v e m b e r 2 0 1 5 www.resourceworld.com 53 bdo Global enerGY releases new mid-markeT companY reporT Global Energy, part of BDO International, an international consulting firm, recently published the 2015 BDO Global Energy Middle Market Monitor. The report details the status of mid-market Canadian versus US companies as well as the general eco- nomic health of Canadian companies. In an email interview, Justin Friesen, national oil & gas lead at BDO Canada in Calgary, discussed the global and Canadian oil sector. Regarding China's role in world oil consumption, Friesen said, "Based on data from the Energy Information Administration (EIA) China's consump- tion of oil is about 11.3 million barrels per day [bpd] for 2015. World consumption is about 93 million bpd for 2015. Thus, China is consuming 12.2% of world consump- tion. China is the second largest consumer of oil, the US being the largest consumer at about 19.2 million bpd. As a result of its growing economy, Chinese demand for oil has been increasing. As a result, it is play- ing an increasingly important role in oil consumption." The Canadian oil sands industry is under stress due to the drop in oil prices. Friesen noted, "The oil sands are facing a challenging time economically. However, it's difficult to determine a break-even point for oil sands as the economics of each project vary. Also, there are factors such as the value of the Canadian dollar, the price of condensates (used in processing of bitumen), and declining vendor costs, that have been fluctuating with the price of oil which impacts the break-even point." He added that there are also significant costs with shutting down and starting up an oil sands project. "Oil sands producers generally have a longer term view for these projects and aren't influenced a great deal by short term oil price fluctuations," he said. "That being said, a significant num- ber of producers have delayed the start of new projects as they curtail capital spend- ing during the downturn." The economics of fracking and hori- zontal drilling is also a concern. "The cost to drill a horizontal well and frack is significant," said Friesen. "However, the economics depend on the quality of the formation being drilled. Some areas are still economical and companies are drill- ing, while other areas are not and drilling has stopped. The cost of drilling declined over the past year which improves the eco- nomics for those still drilling." As for natural gas, Friesen said, "Natural gas is playing a more important role. Earlier this year, natural gas displaced coal to become the top source for gener- ating electricity in the US. The two main reasons are the environmental restrictions related to coal are increasing and the sup- ply of natural gas has increased which lead to low prices." n The report is available at: http://www.bdo. ca/en/Library/Industries/Natural-Resources/ pages/2015-BDO-Global-Energy-Middle- Market-Monitor.aspx Move to Fort St. John and be proud to live in a city where the rewards are as big as the lifestyle. fortstjohn.ca YOU KNOW YOU LIVE IN FORT ST. JOHN WHEN... BIG FUN AND BIG FREEDOM IS PRETTY MUCH HOW WE ROLL. #liveit!fsj Oil & G a S