OPEC says there is room for the oilsands in world market

In an about-face from a year earlier, OPEC says there is room in the oil market for U.S. shale producers, the Canadian oilsands and other higher-cost production. 

Mohammad Sanusi Barkindo, the secretary general of OPEC, said that he met with U.S. shale producers this week in Houston, ahead of the annual CERAWeek energy conference that is organized by the research and consulting firm IHS Markit.

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Those shale producers along with hedge funds met with Barkindo to talk about the state of the oil market, how to rebalance supply with demand and draw down the vast amount of oil still in storage around the world. It's another sign that the cartel has capitulated on a price war that it has never quite admitted to.

Barkindo said that because demand is growing and supply is expected to tighten in the coming years, he sees a significant role for the oilsands, particularly if producers continue to innovate. 

"We expect the tarsands in Canada to also continue to attract investment," he said at a news conference. "With new technology that will address particularly the climate or environmental credentials of the tarsands."

Canadian producers make a pitch

Oilsands producers at the conference are aware they need to address the climate credentials of the oilsands. Earlier in the day, Judy Fairburn, an executive vice-president with oilsands producer Cenovus, made her pitch to a breakfast audience that had come to hear about Canada.

"We've got the fight in us," Fairburn said. "Our business is competitive with light, tight oil. We're cost and carbon competitive. Our sector has a tremendous opportunity to lead on cost and carbon competitiveness in a low-carbon future that the world wants."

Fairburn pointed out that Cenovus is looking to take its greenhouse gas emissions down by a third over the next 10 years, while also lowering its break-even cost per barrel, which sits around $45 US right now.

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"Canada is still a growth story," said Kevin Birn, a senior director with IHS Markit. "It may be more modest than it was in the past, but it's still going to grow, we're a major oil producer, that story is going to continue for the foreseeable future."

Birn pointed out that "Permania" is the theme of the conference this year. He's referring to the Permian Basin in Texas, which is seeing a substantial spike in investment and excitement.

Are the U.S. and Canada family?

The focus at this conference is on the United States, in part because it's held in Houston, but also because of growing U.S. production and uncertainty around the new administration. The U.S. has been a real preoccupation with Canada and other countries during the week.

At the Canadian breakfast on Tuesday, each seat came with some Canadian marketing material, outlining Canada's trade relationship with the United States.

Natural Resources Minister Jim Carr said the two countries were practically family.

"​The connections are remarkable, we go to university in each other's countries. We have relatives, we shop in each other's places, spend lots of money on both sides of the border. Our economies are integrated and they have been for a long, long time. That doesn't change, that shouldn't change and I hope that it won't change."

Prime Minister Justin Trudeau heads to Texas tomorrow, and Carr's comments probably offered foreshadowing of Trudeau's message when he addresses the oil crowd tomorrow evening.