CALGARY - Canada needs a national energy strategy to compensate for rapidly expanding US petroleum production, according to a new study.

Technology such as horizontal drilling could pump up US oil production by 74% of its 2011 level of 8.1 million barrels a day, states and annual Canadian energy survey by the firm PwC.

That means the Canadian industry needs to diversify its markets beyond a U.S. that's becoming more energy independent, said Reynold Tetzlaff, PwC's Canadian energy leader.

"The US is no longer Canada's only market for crude oil," said Tetzlaff. "The more attractive option remains diversified export markets, primarily in China where refining capacity is expected to climb to 13 million barrels a day by 2015."

Canada's 2011 oil production of 2.9 million barrels a day is expected to jump to at least 4.2 million by 2020, states the Canadian Association of Petroleum Producers.

It's an output that's threatening to exceed its ability to transport it to the US, said Tetzlaff.
But he said resistance from landowners and environmentalists to pipeline construction is impacting the ability to transport that oil to both the US and Asia.

Government action is needed to set a course for the Canadian energy sector to take in increasingly competitive, complex times, said the PwC report.

"A national energy strategy is one means that could be used to outline Canada's future energy marketing goals and strategies to achieve those objectives," said Tetzlaff.

He said that will require aligning the interests of provinces that have so far shown reluctance to endorse a national strategy, he added.

Critics of Canada's current energy practises argue the country's being shortchanged by exporting crude for refining elsewhere, while absorbing the environmental costs of production and pipelines.