CANADA'S OPPORTUNITY

IN ENERGY LEADERSHIP

MIRED IN MISINFORMATION & MISUNDERSTANDINGS

CANADA'S OPPORTUNITY IN ENERGY LEADERSHIP

MIRED IN MISINFORMATION & MISUNDERSTANDINGS

Introduction

Canada's energy sector is world class in scale and has world leading capabilities, but it is being progressively hampered by political, legal, and regulatory processes, and hostile activism. There is no fundamental justification for the damage we have done to ourselves. The common explanations come wrapped in concern and criticism about our energy sector's environmental, social, and governance (ESG) standards.


The problem is not what most believe. The problem isn't actual environmental performance or that the industry denies climate change. The problem is misinformation and misunderstandings, a failure to grasp actual realities, an unwillingness to collaborate among ourselves, and a lack of confident, visionary leadership. We have fallen into blame, intensely politicized divisiveness, destructive adverse policy, and are on track to neutralize, if not dismantle, our leading, global energy sector. We have incurred massive economic and social costs, and are experiencing a self-inflicted threat to national unity, with no offsetting material benefit to the problem of global greenhouse gas emissions and climate change. 


The vision that has “benefits to all” is to combine our extraordinary energy resource with the proven innovative potential of the Canadian energy industry to offer cost competitive, reduced carbon, high ESG energy products and advanced technologies that support a long-term global transition to a low-carbon environment.


A great vision will support cohesion and collaboration, and will be inspiring for all Canadians, industry participants, and stakeholders, and it will make a material difference in impacting the problem we are all concerned about: global emissions and climate risk.

What is needed in Canada is visionary leadership grounded in boldness, collaboration, and evidence-based pragmatism.


There is no question that this was absent through the recent national election campaign.

Introduction

Canada's energy sector is world class in scale and has world leading capabilities, but it is being progressively hampered by political, legal, and regulatory processes, and hostile activism. There is no fundamental justification for the damage we have done to ourselves. The common explanations come wrapped in concern and criticism about our energy sector's environmental, social, and governance (ESG) standards.


The problem is not what most believe. The problem isn't actual environmental performance or that the industry denies climate change. The problem is misinformation and misunderstandings, a failure to grasp actual realities, an unwillingness to collaborate among ourselves, and a lack of confident, visionary leadership. We have fallen into blame, intensely politicized divisiveness, destructive adverse policy, and are on track to neutralize, if not dismantle, our leading, global energy sector. We have incurred massive economic and social costs, and are experiencing a self-inflicted threat to national unity, with no offsetting material benefit to the problem of global greenhouse gas emissions and climate change. 


The vision that has “benefits to all” is to combine our extraordinary energy resource with the proven innovative potential of the Canadian energy industry to offer cost competitive, reduced carbon, high ESG energy products and advanced technologies that support a long-term global transition to a low-carbon environment.


A great vision will support cohesion and collaboration, and will be inspiring for all Canadians, industry participants, and stakeholders, and it will make a material difference in impacting the problem we are all concerned about: global emissions and climate risk.

What is needed in Canada is visionary leadership grounded in boldness, collaboration, and evidence-based pragmatism.


There is no question that this was absent through the recent national election campaign.

Want to learn more? Follow the link to the full document with references.
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"The last barrel to be phased out should be the best barrel… and the best barrel should be Canada’s barrel."

"The last barrel to be phased out should be the best barrel… and the best barrel should be Canada’s barrel."

The Emerging Vision

Our customers – the public – want affordability, reliability, and low-carbon, high Environmental, Social and Governance (ESG) standards, and an industry that is innovating and advancing to solve problems and meet needs. This vision of the “best barrel” – the “best energy products” – implicitly embraces the interests of our customers, the public, and all stakeholders. 

It reflects customer mindset, serving what our customers want and need.


It acknowledges and builds on our advantages and strengths.


It is a commitment to excellence and progress.

It is believable as it is grounded in well-substantiated evidence and direct knowledge.

We are now the best – or among the best in the world – and we will be believed when we say, “We are going to become even better.” 

We have all the fundamentals in place to embrace this vision and make it happen.

Misinformation & Misunderstandings

We must see the truth, that we are mired in misinformation and misunderstandings. One profound example relates to what has become the most controversial part of the Canadian energy industry: the oil sands. 


In a recent article published in the New York Times by Lee Wasserman, Director of the Rockefeller Fund, the argument is made that keeping Canada’s “carbon-intensive [oil] sands in the ground [is] at the top of every list … about what we must do to avoid full-blown climate catastrophe.” Further, in reference to the Trans Mountain Pipeline expansion, Wasserman states that, if completed, we will be losing the “last, best opportunity to safeguard what remains of our fragile climate system.”


Contrast these views with the realities:

Our oil sands contribute only 0.15% of global emissions.

GHGs from the Canadian oil sands are immaterial to global emissions. If we phase out our oil sands, the lost volumes would be replaced by supplies from other countries...We have calculated that the net reduction in global GHGs would be a negligible 0.03 of 1% (or 3/100ths of 1%).

By the numbers...

Visualize 100 peanuts in a jar. The contribution of Canada’s GHG emissions from the oil sands to the global total is not even one peanut. It is about 1/7th of one peanut! For further context, in 2018, the increase in GHG emissions from China and India – just the year-over-year increase – was equivalent to adding ten Canadian oil sands. The total absolute level of GHGs from China and India in 2018 was about 12,000 MTs, which is roughly equivalent to 150 Canadian oil sands.

This is all public information and the math is simple, yet the director of a high-profile foundation somehow succeeded in publishing in a leading global media outlet that Canada’s oil sands are going to destroy the world. In considering these realities, how is it possible to argue that the oil sands are somehow a material factor in causing a global climate catastrophe, and phase out of the oil sands would some how save the world? The absolute level of GHG emissions from the oil sands is immaterial on a global basis. However, this is no excuse not to reduce emissions from the oil sands and all other sources.

Misinformation & Misunderstandings

We must see the truth, that we are mired in misinformation and misunderstandings. One profound example relates to what has become the most controversial part of the Canadian energy industry: the oil sands. 


In a recent article published in the New York Times by Lee Wasserman, Director of the Rockefeller Fund, the argument is made that keeping Canada’s “carbon-intensive [oil] sands in the ground [is] at the top of every list … about what we must do to avoid full-blown climate catastrophe.” Further, in reference to the Trans Mountain Pipeline expansion, Wasserman states that, if completed, we will be losing the “last, best opportunity to safeguard what remains of our fragile climate system.”


Contrast these views with the realities:

Our oil sands contribute only 0.15% of global emissions.

GHGs from the Canadian oil sands are immaterial to global emissions. If we phase out our oil sands, the lost volumes would be replaced by supplies from other countries...We have calculated that the net reduction in global GHGs would be a negligible 0.03 of 1% (or 3/100ths of 1%).

By the numbers...

Visualize 100 peanuts in a jar. The contribution of Canada’s GHG emissions from the oil sands to the global total is not even one peanut. It is about 1/7th of one peanut! For further context, in 2018, the increase in GHG emissions from China and India – just the year-over-year increase – was equivalent to adding ten Canadian oil sands. The total absolute level of GHGs from China and India in 2018 was about 12,000 MTs, which is roughly equivalent to 150 Canadian oil sands.

This is all public information and the math is simple, yet the director of a high-profile foundation somehow succeeded in publishing in a leading global media outlet that Canada’s oil sands are going to destroy the world. In considering these realities, how is it possible to argue that the oil sands are somehow a material factor in causing a global climate catastrophe, and a phase out of the oil sands would some how save the world? The absolute level of GHG emissions from the oil sands is immaterial on a global basis. However, this is no excuse not to reduce emissions from the oil sands and all other sources.

Canadian Producers Have Made

Significant Progress

Emissions on legacy production have declined significantly and new projects are now being developed at lower emissions per barrel than the average in U.S. and world markets. Emissions intensity of Canada’s oil sands is down 28% since 2000 and is anticipated to decline about another 20% through to 2030. Progress from five companies that make up approximately 45% of oil and liquids production in Canada are shown below. For full details, see our full document.

MEG 

MEG is evidencing GHG emissions intensity that is 20% lower than the industry average, while also withdrawing 57% less water per barrel produced (and recycling 90% of water used).


Attacks on Canada’s oil sands because of high GHG intensity and climate concerns reflect a gross distortion of the materiality of emission levels. 

This is the story of yesteryear. But the myth continues, causing ongoing damage.

Canadian Producers Have Made

Significant Progress

Emissions on legacy production have declined significantly and new projects are now being developed at lower emissions per barrel than the average in U.S. and world markets. Emissions intensity of Canada’s oil sands is down 28% since 2000 and is anticipated to decline about another 20% through to 2030. Progress from five companies that make up approximately 45% of oil and liquids production in Canada are shown below. For full details, see our full document.

MEG 

MEG is evidencing GHG emissions intensity that is 20% lower than the industry average, while also withdrawing 57% less water per barrel produced (and recycling 90% of water used).


Attacks on Canada’s oil sands because of high GHG intensity and climate concerns reflect a gross distortion of the materiality of emission levels. 

This is the story of yesteryear. But the myth continues, causing ongoing damage.

Cascading Negative Consequences

How many of us know that our strategically important oil and gas industry is currently experiencing a meltdown? At the same time, the U.S. industry has been enjoying a major expansion.

  • The growth in U.S. oil production over the last ten years (2008) is approximately equivalent to adding another Canada in world markets (growth of ~6 mmb/d).
  • The LNG business in the U.S. has leapfrogged past Canada in capturing Asian LNG markets, currently averaging 5.23 bcf/d, compared to no current production in Canada , and constructing and sanctioning for 10 bcf/d of capacity by the end of 2020 versus 1.8 bcf/d for Canada
  • Capital, equipment, and some of our most talented workers arexiting. Some of our own world-class, leading businesses, such as Encana, TC Energy (formerly TransCanada), and Enbridge, are shifting their business to the U.S.
  • We estimate that 77,000 direct jobs have been lost in Canada’s energy sector since 2012. Numerous major international companies have exited the Canadian energy sector. Looking at these companies, we estimate that approximately $40 billion worth of assets have been sold off since 2014.

How do we account for the social costs of these job losses?


Many Albertans are understandably feeling that the government’s commitment to preserve and create jobs depends on where the jobs are within Canada. Even a priority as basic as jobs has become extremely politicized.

Cascading Negative Consequences

How many of us know that our strategically important oil and gas industry is currently experiencing a meltdown? At the same time, the U.S. industry has been enjoying a major expansion. 

  • The growth in U.S. oil production over the last ten years (2008) is approximately equivalent to adding another Canada in world markets (growth of ~6 mmb/d).
  • The LNG business in the U.S. has leapfrogged past Canada in capturing Asian LNG markets, currently averaging 5.23 bcf/d, compared to no current production in Canada, and constructing and sanctioning for 10 bcf/d of capacity by the end of 2020 versus 1.8 bcf/d for Canada
  • Capital, equipment, and some of our most talented workers arexiting. Some of our own world-class, leading businesses, such as Encana, TC Energy (formerly TransCanada), and Enbridge, are shifting their business to the U.S.
  • We estimate that 77,000 direct jobs have been lost in Canada’s energy sector since 2012. Numerous major international companies have exited the Canadian energy sector. Looking at these companies, we estimate that approximately $40 billion worth of assets have been sold off since 2014.

How do we account for the social costs of these job losses?


Many Albertans are understandably feeling that the government’s commitment to preserve and create jobs depends on where the jobs are within Canada. Even a priority as basic as jobs has become extremely politicized.

1

Investor confidence has collapsed

My view was and remains: it is too late to worry. 
We are beyond trying to avoid or mitigate the risk of damage to investor confidence. The damage has happened, and much has been self-inflicted. From the point of view of investors, they see the mess and don’t care who is to blame. Most are saying some version of, “Canada can’t get its act together and we are giving up.”

2

Much of the damage has been the result of failed political, legal and regulatory process, and hostile activism.

Failure to build much needed take-away capacity has resulted in the failure to realize the full value for our energy commodities.  For oil alone, from 2013 to 2018, there has been $40 billion in lost revenue for Canadian energy companies. 

At the top of the list is a series of failed high-profile projects:

3

There has also been damage from provincial, inter-provincial, and federal sources.

Policy development and political process in 2019 has created severe damage. Through the Bill C-48 and C-69 processes, we turned our backs on the advice of expert witnesses; the studied, and well-considered recommendations of our senate; the formalized pleas of six premiers, and nine premiers in total who were opposed; and the input and needs of major project proponents, all of which impacts our national unity and serves to reinforce existing negativity towards investing in Canada. 

  • Recommendations from the due process of two Senate committees to withdraw Bill C-48 and overhaul Bill C-69 were rejected (C-48) and substantially turned down (C-69).
  • A rejection of the input, and implicitly the needs, of leading project proponents who are the ones that make new projects happen.
  • Rejection of the pleas of six premiers, representing approximately 60% of all Canadians, to not proceed with the enactment of Bills C-48 and C-69 as written.
  • An implicit disregard of our need for investment and infrastructure capital, which is the source of future prosperity for Canadians.

How can our political leaders talk about inclusivity, while at the same time trample on the interests of one region, and disregarding the input and concern from within that region? 

Our energy sector is a global leader in scale and ca​pabilities. Our ESG Standards and performance are exemplary.

Our energy sector is a global leader in scale and ca​pabilities. Our ESG Standards and performance are exemplary.

Canada's Energy Sector is

a Global Leader

Among Canadians, resistance to the oil and gas sector relates primarily to perceptions and concerns about the industry's ESG standards and performance. Perceptions are not reality. 

Among oil producing countries in the world, Canada’s ESG standards and performance are as good as it gets.


Based on an assessment of ESG performance, BMO cites Canada as having the top “global ESG scores given performance across [a] spectrum of important issues from environmental policy, to social welfare, political stability, regulatory oversight and corporate governance.” Further, they note Canadian oil companies deliver stronger ESG scores than companies of almost all other oil producing countries in the world.


The conclusion from a study conducted by Worley Parsons Canada was unsurprising: "Canada's Environmental Assessment processes are among the best in the world."

Two examples are ARC Resources and ARC Financial.

ARC Resources has been recognized for its governance leadership by institutional investors, not just in Canada, but globally. ARC Resources is ranked among the top 1% of 1,400 companies surveyed globally by Brendan Wood International. We have some fantastic leading businesses in Canada that are leading the way for the rest of the world.


Canada's Energy Sector is

a Global Leader

Among Canadians, resistance to the oil and gas sector relates primarily to perceptions and concerns about the industry's ESG standards and performance. Perceptions are not reality. 

Among oil producing countries in the world, Canada’s ESG standards and performance are as good as it gets.

Based on an assessment of ESG performance, BMO cites Canada as having the top “global ESG scores given performance across [a] spectrum of important issues from environmental policy, to social welfare, political stability, regulatory oversight and corporate governance.” Further, they note Canadian oil companies deliver stronger ESG scores than companies of almost all other oil producing countries in the world.

Two examples are ARC Resources and ARC Financial.

ARC Resources

ARC Resources has been recognized for its governance leadership by institutional investors, not just in Canada, but globally. ARC Resources is ranked among the top 1% of 1,400 companies surveyed globally by Brendan Wood International. We have some fantastic leading businesses in Canada that are leading the way for the rest of the world. 


ARC Financial

​ARC Financial, has similarly been recognized for its leadership in ESG standards. In 2016, Yale's Chief Investment Officier, David Swensen, stated in the New York Times: "[ARC Financial has] developed a framework for assessing, reporting and comparing the greenhouse gas intensity of fossil fuel operations on an apples-to-apples basis" and praised ARC's diligence in "using it as a tool when they make new investments."

Other critical achievements

In addition to reducing GHG emission levels, there are numerous other achievements critical to Canada's ESG performance, which include:

Our electricity sector is among the greenest in the world. 80% of our electricity is from non-GHG emitting sources, approximately twice the 40% average for OECD countries.
Canada is a recognized as a global leader in methane reductions from flaring and venting. If Canada’s standards were imposed worldwide, GHGs from producing the average barrel of oil would fall by 23%
Canada is a world leader in carbon capture and storage (CCS). There are 2 existing long-standing commercial projects in Southeast Saskatchewan, 4 significant demonstration projects, and numerous feasibility and pilot projects underway.
Our safety is world-class.

Over the past 10 years, liquid incidents have declined by 90%, 99.3% of oil spilled was recovered through cleanup.
 
There are 20,000 tanker movements per year, and we have had no significant accidents or spills.

Lastly, we’re among the best in corporate governance in the world. Virtually all global reports and independent rankings confirm this. Rahul Bhardwaj, President and CEO of the Institute of Corporate Directors, notes that,

 

“Canada’s excellent and predictable governance places it firmly in the very upper end of countries. It is enshrined in the rule of law, which is independently and emphatically enforced…This is what will define us from our global counterparts in the 21st Century and beyond.”


Innovation, Initiative, & 

Advanced Technology

Innovation and technology is another key strength of the Canadian energy industry. Some people argue that we are an old industry stuck in old technologies. Nothing could be farther from the truth. We are an old industry in the same way that food is an old industry; people have always needed food and likewise, have always needed energy.

Remember peak oil?

The consensus view, alive for decades, was that oil supply would soon peak and enter terminal decline, leading to what some viewed as the “collapse of civilization.” This consensus view on scarcity was the original inspiration that drove the push for renewables. During the height of public concern, there were numerous articles referring to the “peak oil catastrophe.” Here is the title from one report published just less than nine years ago (2011): “The peak oil catastrophe-in-waiting.” The first sentence read, “The United States continues to slumber while a catastrophe lies in wait.” At the time when this was written, the U.S. and Canada were on the verge of a supply side revolution. We disrupted ourselves with advanced technology and resolved what many viewed as an irresolvable problem, conferring enormous benefit to society.

Instead of being asleep in the face of possible catastrophe, we unleashed a tsunami of innovation and have gone from shortage to abundance, at least in North America. Technology, advanced drilling and completions, digitization, and automation have transformed the supply cost curve of the industry. The price of oil and gas worldwide would probably be twice what it is today if not for this technological revolution. 

Innovation, Initiative, &

Advanced Technology

Innovation and technology is another key strength of the Canadian energy industry. Some people argue that we are an old industry stuck in old technologies. Nothing could be farther from the truth. We are an old industry in the same way that food is an old industry; people have always needed food and likewise, have always needed energy.

Remember peak oil?

The consensus view, alive for decades, was that oil supply would soon peak and enter terminal decline, leading to what some viewed as the “collapse of civilization.”  This consensus view on scarcity was the original inspiration that drove the push for renewables. During the height of public concern, there were numerous articles referring to the “peak oil catastrophe.” Here is the title from one report published just less than nine years ago (2011): “The peak oil catastrophe-in-waiting.” The first sentence read, “The United States continues to slumber while a catastrophe lies in wait.” At the time when this was written, the U.S. and Canada were on the verge of a supply side revolution. We disrupted ourselves with advanced technology and resolved what many viewed as an irresolvable problem, conferring enormous benefit to society.

Instead of being asleep in the face of possible catastrophe, we unleashed a tsunami of innovation and have gone from shortage to abundance, at least in North America. Technology, advanced drilling and completions, digitization, and automation have transformed the supply cost curve of the industry. The price of oil and gas worldwide would probably be twice what it is today if not for this technological revolution. 

Across the energy and technology sectors, there are many new technologies being developed which will improve both efficiency and environmental performance. Canadian innovation, initiative, and advancing technology, combined with other strengths, creates the leverage to make Canada a leader in reducing global emissions.

1

LNG Canada will be the lowest emission LNG plant in the world.

  • The project is estimated to reduce emissions by 60 to 90 MT through the replacement of coal in China. 
  • This is roughly equivalent to removing 80% of the cars on Canada’s roads. 
  • This also roughly offsets the emissions from our entire oil sands sector.
  • For further context, if Canada bought every car Tesla made at current rates, it would take approximately 57 years to produce the climate benefit that LNG Canada will have in only 4 years.

2

We are a leader in methane regulations and reductions.

  • We are also a leader in methane detection and mitigation technologies
  • Methane reductions in Canada are happening. CNRL has reduced methane emissions by 78% since 2012, and they continue to lead and advance innovation through investing in R&D and collaborating with industry partners. 
  • In 2018, CNRL launched the Fugitive Emissions Management Program Effectiveness Assessment (FEMP EA), “the world’s first-of-its-kind methane leak detection, quantification and repair project.” 30 producers are collaborating to build a methane emission inventory of 200 oil and natural gas facilities that repeatedly measure emissions over a 12-month period.

3

The oil and gas sector is the largest investor in clean tech in Canada and there are other major entrepreneurial initiatives underway.

  • Clean tech within the industry does not have the “pop and sizzle” of venture capital, but it has long time frames, large balance sheets, access to a unique depth of scientists and engineers, and readily available real-world applications. 
  • You can expect to see real advancements in carbon capture, sequestration, and usage. One noteworthy initiative is the Alberta Carbon Trunk Line which will have capacity to move 15 million tons per year of carbon for permanent re-injection of CO2 into the ground or “net zero” enhanced oil.

The dramatically reduced environmental impact, the enhanced safety of our transportation systems, and reduced emissions among others, are all being driven by advanced technology. Ironically, much of Canada’s clean tech investing is occurring within Canada‘s oil sands companies.

We need Canada's major oil and gas companies: Suncor, Cenovus, Canadian Natural Resources, Imperial, MEG, and others

We need their commitment and willingness to invest in new technologies and to advance progress in the industry. We need their balance sheets, their depth of technical expertise, and their long-term strategies and time horizons. Across the energy and technology sectors, there are many new technologies being developed which will improve environmental performance, the following are a few selected examples. For full details, please read the full document

Sustainable hydrocarbon recovery using CO2 injection in tight reservoirs.


Microseismic monitoring and advanced modeling to mitigate the risk of induced seismicity.


Continued phasing out of high emission frac pumps in favour of cleaner, more efficient units.


And, there are numerous technologies and processes being researched and developed to convert CO2 into useful products such as super strong, low weight carbon microfibres and recycling carbon into “green” fuels.


The challenge for policy makers is that the outcomes of innovation are difficult to see and predict, but research, creativity, innovation, and entrepreneurialism represents the greatest opportunity in the path forward to resolve, or substantially mitigate, our environmental risks and problems. 


Political leaders need to turn towards the oil and gas sector and see it as a critical part of the solution, not the problem.

We need collaboration, not divisiveness.

When the energy sector excels, all Canadians prosper

The Importance of the Oil and Gas Sector to Canada

As we struggle in Canada with adverse policies, misinformation and misunderstandings, and sentiments that are hostile to the oil and gas sector, many of us within different regions of Canada fail to realize that the size and scope of our oil and gas production and pipeline business is:

LARGER

 than the combined Banking, Investment Management, and Insurance Sector within Canada

1.7x

 Entire Transportation Sector (including air, rail, water, trucking and related warehousing).

2.6x

 Residential Construction Sector

4.0x

 Telecommunications Sector

5.6x

 Combined Forestry, Logging Wood Product, and Paper Manufacturing Sectors 

8.2x

 Auto Parts Manufacturing Sector

These numbers represent $132 billion of GDP. This increases to $200 billion if you add related downstream activities and power generation.


This number gets even larger if you consider service and manufacturing directed towards the energy sector.

My read of the data is that our Canadian energy sector is the largest sub-sector of the Canadian Economy.​​​​

Our energy sector is important within Canada, and we are a major player in global markets.

The oil and gas sector's contribution to all Canadians

Another critical understanding that has been lost is the financial contribution of our oil and gas sector to the rest of Canada. Alberta has contributed cumulativel$630 billion in net federal transfers to confederation since 1961 and has always been a net giver, never a receiver. The oil and gas sector has been the engine of this financial contribution. This year alone, Alberta's fiscal transfers will total $22 billion, and generally have averaged approximately $24 billion/year from 2007-2015. Alberta’s prosperity has, in fact, been Canada’s prosperity.



Alberta VS. Norway

Some often ask why Alberta couldn't do what Norway did and build up a massive sovereign fund, which today exceeds $1 trillion. There are numerous factors, however, the main reason relates to fiscal transfers from Alberta to the rest of Canada. Norway is a sovereign country and was not hampered by fiscal transfers to other jurisdictions. Add a modest return on the cumulative $630 billion that has been transferred, and we could easily have a $1 trillion fund. Expressed differently, if these transfers had been accumulated within a national fund, Canada would have a $1 trillion fund.


If Alberta could keep even a portion of the $24 billion...
  1. Offset Alberta’s 275 MT of GHG emissions annually, by plantin13 billion trees at the cost of approximately $5 billion.  
  2. Or, nationally, offset Canada’s 750 MT of GHG emissions annually, by planting 34 billion trees at the cost of approximately $14 billion.

Both scenarios align with our Paris commitments, and the Liberal promise of net zero emissions by 2050.

Global energy transition 

The GHG emissions issue is serious. We need to reduce emissions. Our customers and stakeholders want lower carbon products. But the issue must be understood in the context of five evidence-based, concrete realities.

1

Global emissions is a global problem, not a local problem.

Emissions are created throughout the world and collect in our atmosphere. It doesn’t matter whether a coal plant is in China, the United States, or Canada. The amount of greenhouse gases measured in the atmosphere is roughly the same all over the world, regardless of the source of the emissions. At the local level, in Canada, we are not creating our climate.

2

It's consumption, not production, that is most impactful.

Emissions are roughly four times greater at end-use consumption versus extraction – 80% versus 20%. It is four times more a consumption versus production problem, so why are producers being singled out to blame?

3

Markets are dynamic and competitive and capital is mobile.

If we shut down production, we will be shifting investment, jobs, and tax base to other jurisdictions.

4

Global demand for hydrocarbons is expected to grow by about one third through to 2040.

Even in the most conservative low demand scenarios, we will still be using hydrocarbons for multiple decades. World oil demand will likely not peak for at least another 10+ years and natural gas for at least 15 years.

5

Renewables’ share in global energy demand is about 3.6%, which is the result of nearly $4 trillion in investment globally since 2005.

Comparatively, over the same period, the oil and gas sector in Canada has spent approximately $745 billion. The vision of a relatively fast transformation of our energy system using solar and wind as the primary strategy is unrealistic. Solar and wind are making great progress and must be embraced, but alone are insufficient as a short-term bridge to a low-carbon world.

If we shut down our oil sands – or even our entire oil and gas industry – we may not have any material impact on global emissions. In fact, emissions may go up. The GHGs on the extraction side would shift to suppliers in other jurisdictions, like Saudi Arabia, Iraq, Venezuela, and Mexico, who would likely have higher emissions and lower ESG standards. Further, if nothing else changed, consumption within Canada would be supplied simply through increasing imports. The net effect is essentially zero impact on global emissions, a loss of energy security, and a serious loss of prosperity within Canada.

The transition away from hydrocarbons towards a low-carbon future will occur over a very long time frame: multiple decades, not years. Whether we like it or not, world oil demand continues on an inexorable march upwards, growing 15.3 million barrels/day over the past ten years. Further, while the discussion and the shift to renewables is an important part of the energy mix, it cannot be overstated that access to energy is essential to reduce poverty. Globally, as of 2018, approximately one billion people still live without electricity and three billion people use polluting fuels to cook, undermining their health, development prospects, and quality of life.

How has Canada gotten so off track, and what can we do differently?

Global energy transition 

The GHG emissions issue is serious. We need to reduce emissions. Our customers and stakeholders want lower carbon products. But the issue must be understood in the context of five evidence-based, concrete realities.

1

Global emissions is a global problem, not a local problem.

Emissions are created throughout the world and collect in our atmosphere. It doesn’t matter whether a coal plant is in China, the United States or Canada. The amount of greenhouse gases measured in the atmosphere is roughly the same all over the world, regardless of the source of the emissions. At the local level, in Canada, we are not creating our climate.

2

It's consumption, not production, that is most impactful.

Emissions are roughly four times greater at end-use consumption versus extraction – 80% versus 20%. It is four times more a consumption versus production problem, so why are producers being singled out to blame?

3

Markets are dynamic and competitive and capital is mobile.

If we shut down production, we will be shifting investment, jobs, and tax base to other jurisdictions.

4

Global demand for hydrocarbons is expected to grow by about one third through to 2040.

Even in the most conservative low demand scenarios, we will still be using hydrocarbons for multiple decades. World oil demand will not peak for at least another 10+ years and natural gas for at least 15 years.

5

Renewables’ share in global energy demand is about 3.6%, which is the result of nearly $4 trillion in investment globally since 2005.

Comparatively, over the same period, the oil and gas sector in Canada has spent approximately $745 billion. The vision of a relatively fast transformation of our energy system using solar and wind as the primary strategy is unrealistic. Solar and wind are making great progress and must be embraced, but alone are insufficient as a short-term bridge to a low-carbon world.

If we shut down our oil sands – or even our entire oil and gas industry – we may not have any material impact on global emissions. In fact, emissions may go up. The GHGs on the extraction side would shift to suppliers in other jurisdictions, like Saudi Arabia, Iraq, Venezuela, and Mexico, who would likely have higher emissions and lower ESG standards. Further, if nothing else changed, consumption within Canada would be supplied simply through increasing imports. The net effect is essentially zero impact on global emissions, a loss of energy security, and a serious loss of prosperity within Canada.

The transition away from hydrocarbons towards a low-carbon future will occur over a very long time frame: multiple decades, not yearsWhether we like it or not, world oil demand continues on an inexorable march upwardsgrowing 15.3 million barrels/day over the past ten years. Further, while the discussion and the shift to renewables is an important part of the energy mix, it cannot be overstated that access to energy is essential to reduce poverty. Globally, as of 2018, approximately one billion people still live without electricity and three billion people use polluting fuels to cook, undermining their health, development prospects, and quality of life.

How has Canada gotten so off track, and what can we do differently?

1

Continued focus on ESG Performance

Historically, our industry was insufficiently focused on ESG issues. This has changed and perceptions now have to match reality. The industry must remain passionately committed to innovation and to further improving its environmental performance.

2

Stronger communication to educate others about our energy sector

Historically, industry leaders talked a lot about jobs and wealth. The public also wanted environmental sustainability and social value. We all need to communicate and advocate to all stakeholders our current ESG performance and standards. Industry leaders, industry workers, all of us who are informed, all our politicians, including federal politicians, need to contribute.

3

Unite and mobilize to represent ourselves to our fellow Canadians

It can be objectively said that the lack of Alberta and Saskatchewan representation in government policy and decision making creates a risk for ourselves as a region and for the unity of Canada. We all need to mobilize and step up our public and political profile to more actively represent ourselves to our fellow Canadians. This is in the interests of all of us who live in these under-represented regions of Canada, and it is in the interests of all Canadians.

4

Support and embrace a clean energy leadership vision

There are two competing visions for Canadian energy. One involves the diminishment, if not outright dismantling, of a leading innovative, ethical global industry. This is the path we are on now. This strategy may somehow “feel good” for some Canadians and may produce “gains” for some political leaders, but it comes with enormous financial and social costs and is a threat to national unity. Ironically, the impact of this strategy on global emissions and climate change is immaterial or negative as new supplies will come from countries with lower ESG standards. The other vision is to support the development of a “clean, ethical Canadian energy brand” based on innovation and a commitment to a low-carbon future, leveraging our technologies and advanced processes to have a material impact. This is the vision that offers maximum “benefits to all.”

Canada's opportunity to be a global leader in energy and environmental stewardship.

As preposterous and unbelievable as this may sound given current political realities, to achieve a full strategic turnaround of Canada’s energy sector requires high level political leadership – specifically, the Prime Minister, Ministers, and Premiers – to position themselves in front of our industry and face outwards to all Canadians and the world, extolling the excellence, accomplishments, adaptability, resilience, and extraordinary ESG performance of our energy industry in Canada. 


We need a complete about-face in the narrative from our politicians and senior government officials that is nevertheless consistent with a vision to reduce global emissions and climate risk, and which supports a long-term transition to a low-carbon world. This vision is consistent with our climate strategy goals AND with preserving our national unity.


The basis of this new vision and narrative is existing evidence-based realities and the moral responsibility to do what is in the best interest of all Canadians and the world.