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Energy investors look at Canada’s role in global energy security

Speakers at the annual Energy Symposium believe Canada must take advantage of opportunity to supply responsible energy to allies and the world.

In partnership with Scotiabank, the Canadian Association of Petroleum Producers (CAPP) presented Canada’s premier energy conference, the Scotiabank CAPP Energy Symposium on April 5 and 6, 2022. The annual conference connects Canada’s upstream producers with the investment community, featuring stimulating keynote addresses, presentations and panel discussions with top executives from some of Canada’s largest oil and natural gas producers. The virtual event attracted investors eager to learn how Canada’s energy industry is managing through the current unprecedented market conditions.

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Global energy security an overarching theme

Conference themes focused on several timely and topical issues, including energy security. In his opening remarks, CAPP president and CEO Tim McMillan noted, “Europe’s focus on climate and emissions reduction has resulted in energy shortages, skyrocketing prices, and over-reliance on non-democratic suppliers such as Russia. This situation in Europe enabled Russia’s invasion of Ukraine, which is further exacerbating global energy supply disruptions.”

Read more: Who should supply energy the world needs?

The first day’s keynote speaker Jim Burkhard, vice-president with international energy consultancy IHS Markit, built on McMillan’s remarks. “The invasion of Ukraine by Russia – one of the world’s largest oil and gas producers – marks a pivot point, sparking a division between countries that will buy energy from Russia and those that won’t,” he commented. “We are seeing the partitioning of the global oil market. Don’t expect it to go back to the way it was before. This is the beginning of this new era.”

Energy transformation and commodity implications

Mark Mills, senior fellow, Manhattan Institute for Policy Research and faculty fellow, Northwestern University, provided an overview of the implications of moving rapidly away from oil and natural gas in favour of renewables and increasing market penetration of electric vehicles. He cited a remark by the president of the European Union, “The quicker we move to renewables and hydrogen, the quicker we’ll be truly independent,” and another recent comment from U.S. president Joe Biden, “We need to double down on our clean energy goals.”

But as Mills explained, the energy transformation will not be fun, fast, easy, or inexpensive. A too-rapid, ill-planned transformation of the world’s energy supplies and systems would be hard to achieve and could actually have overwhelming, perhaps catastrophic implications. Mills noted the sheer quantity of resources such as nickel, aluminum, copper, and other minerals needed to create batteries and component parts for electric vehicles, as well as components used in wind turbines and solar arrays, is likely impossible to achieve without serious environmental and economic implications due to the amount of new mining needed. Additionally, many large mineral deposits are located in jurisdictions that are potentially unreliable, such as Chile, China and Indonesia.

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Mark Mills of the Manhattan Institute for Policy Research discussed the need for caution to avoid unintended consequences from a too-rapid energy transformation. Photo courtesy Mark Mills

An opportunity for Canadian producers

Mills, Burkhard and other symposium speakers identified the potential opportunity for Canadian natural gas and oil to displace energy from non-democratic suppliers. Although Canada lacks infrastructure such as pipelines and liquefied natural gas (LNG) facilities, and therefore can’t offer much increased supply to Europe in the short term, the energy security issue will persist for years given increasing global energy demand and the sheer size of Russian supply to be displaced (Russia is the world’s second-largest oil producer and supplies 40 per cent of the natural gas consumed by European nations). This opens a significant opportunity for Canada’s resources if we begin building now. Industry leaders said they’re committed to working with governments to meet global energy security needs with responsibly produced Canadian oil and natural gas.

Read more: Russia strengthening hold on global energy markets

It’s the responsible nature of Canada’s industry that should make Canadian energy supplies attractive to global markets. Canada has high standards for environmental, social and governance (ESG) performance – and leading oil sands producers, already driving down emissions through technology and innovation, have committed to achieving net zero emissions by 2050. This is in significant contrast to state-run suppliers such as Saudi Arabia and Russia that lack transparency and accountability in environmental reporting.

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In particular, speakers pointed to the opportunity for low-emissions LNG from Canada to displace high-emitting coal for electricity generation in countries like India and China. Jeff Tonken, president and CEO, Birchcliff Energy Ltd. said, “Truly if you care about world emissions, LNG is a way for Canada to have a serious impact on emissions reductions.”

And ARC Resources CEO Terry Anderson told the symposium, “We have the resource to help the world become cleaner and fight climate change, and also help our neighbours in Europe from an energy security perspective.”  

Indigenous reconciliation

Another prevailing theme was the opportunity increased oil and natural gas investment can provide to Indigenous communities. The symposium included a panel discussing the strengthening engagement of Indigenous communities and businesses in the industry. Participants Robert Merasty, executive director, Indigenous Resource Network and Stephen Buffalo, president and CEO, Indian Resource Council, both commented on the benefits of resource stewardship – and the ongoing propensity of outside interests such as Hollywood celebrities who comment on Canada’s resource development without a real understanding of the issues and opportunities.

Buffalo said, “I’m really tired of seeing all our social problems, things like opioids, and murdered and missing Indigenous women, on the front page. Our federal government doesn’t give us more money to deal with these issues. We have to do it ourselves and the only way is through infrastructure ownership and natural resource development for the economic and other benefits that will bring.”

Merasty added, “Those people who purport to represent the interests of our people, don’t do that… they aren’t making decisions for our people. They aren’t considering our grass roots needs. Communities engage in resource development because it allows them to take care of the many needs of their people. What’s the alternative activists are proposing? Because the status quo is unacceptable.”

Read more: How oil sands can help the world achieve net zero emissions

A path to net zero emissions

A panel of industry representatives from Canadian Natural Resources Ltd., Imperial Oil and Cenovus discussed pathways to achieve net zero emissions in the oil sands by 2050. Speakers noted the industry intends to use a variety of technologies and innovations, some of which are currently proven and in use, while others will emerge over the next decades. Carbon capture, for utilization or storage, is among the technologies currently in use, with more projects to come. Carbon capture offers significant opportunities for emissions reduction, but other promising pathways include process improvements, electrification and fuel substitution, co-generation and emerging areas such as other uses for bitumen beyond combustion.