Issue link: http://resourceworld.uberflip.com/i/759903
D E C E M B E R / J A N U A R Y 2 0 1 7 www.resourceworld.com 63 Oil & g A s as the fuel of choice for power generation replacing coal. He said CAPP's natural gas forecasting is based on two separate demand sce- narios: a market growth scenario where western Canadian natural gas is able to reach the global LNG market; and, a status quo scenario where natural gas produc- tion continues to be constrained by access to existing markets as well as the loss of northeastern US markets due to increased US shale natural gas production. The US goal of energy self-sufficiency took a giant leap forward recently with the announcement by the US Geological Survey of the largest continuous oil and gas deposit ever discovered in the US. The Wolfcamp shale find in Texas contains 20 billion barrels of oil and 16 trillion cubic feet of natural gas. The oil alone is estimated to be worth $900 billion at cur- rent prices, which has companies like Pioneer Natural Resources [PXD-NYSE], ConocoPhillips [COP-NYSE] and Concho Resources [CXO-NYSE] scrambling to capitalize on their existing positions in the area. However, given the expectation that the resource will be extracted using hori- zontal drilling and hydraulic fracturing, increasingly strong opposition from envi- ronmental groups could become a factor. The Independent Petroleum Association of America (IPPA) is taking a balanced approach. Staff economist Frederick Lawrence said he sees a "a continued tightening" of the general oil oversupply situation (dependent in part on OPEC) and a gradual "destocking" of ample invento- ries over the next year. "The limited spare capacity, decline curves and lack of investment going into exploratory drilling will also make an impact going into late 2017 thru 2019, pro- viding some upward impetus for oil," he said. Lawrence noted there's fairly strong demand in both Organization for Economic Co-operation and Development (OECD) countries due to cheaper commodity prices such as gasoline and diesel, espe- cially in North America and Europe, and "rather robust demand growth (even with slowdowns in China and some commod- ity-producing countries) in developing economies, with India, for example, grow- ing around 8% this year in petroleum demand." He said 2016 was a tough year with continued layoffs taking place in the sec- tor, from service companies to E&Ps and all other industries associated with them. More than 150 companies went the route of Chapter 11/bankruptcy "and the dam- age is far from over," he said. "Capital markets were also much weak- ened and companies suffered from the bi-annual reserve redeterminations which considerably affected their ability to address leverage and debt concerns both in the present and future." However, hope can be found in the opening up of both oil exports and natural gas/LNG exports, he said, providing criti- cal new markets for the American