Oil & Gas
Canada an emerging energy superpower, says former enviro minister
- Details
- Category: Oil & Gas
- Written by Paul Wells
Former federal environment minister Jim Prentice says Canada can reach its goal of becoming an energy superpower in the next decade. but only if it diversifies and strengthens its energy markets and improves environmental sustainability.
Speaking at a recent Calgary Chamber of Commerce event, Prentice said that while Canada is blessed with abundant energy resources, that fact alone will not sustain the industry going forward. Numerous challenges must be overcome in order to fully realize the country’s energy potential.
“We are a profoundly wealthy nation. Small in population, well educated and possessing a vastly disproportionate share of the world’s oil, natural gas and hydroelectricity. We will emerge as an energy superpower as we overcome the challenges of developing infrastructure and markets which are commensurate to our resource base. This I know,” Prentice says.
“In 2021, Canada will be an energy superpower. But mere ownership of resources does not make us a superpower. We are the world’s largest producer of energy in all forms…but we are still missing one vital component: a diversified market.”
Prentice, who left politics last fall to accept the position of vice-chairman of CIBC, notes that with the United States still the destination of the vast majority of Canada’s energy exports, the country and the energy industry have become a “price-taker rather than a price-maker.” Canada has to move beyond “being merely a continental energy supplier,” he says.
NEW MARKETS REQUIRED
He also believes that opening up Canada’s energy trade to the Asia-Pacific for both liquefied natural gas (LNG) and oil is imperative. And that means industry and government must work together to move forward with investments in the transportation and distribution network that would be required.
“It is critical that we move forward with investments in the transportation and distribution of LNG from our west coast. In fact, an LNG terminal for Kitimat, British Columbia, is already on the drawing board. Then there’s oil. Much has already been said about the importance of Northern Gateway and other projects to opening up Canada’s oilsands to an energy-hungry world,” he says.
“I think that at the end of the day it’s in our national interest that we have the capacity to export into the Asian Pacific. It’s really fundamental to our national interests to be an energy superpower and have diversified markets. I’m an optimist and I think it will happen.”
Prentice says that the United States will not be the major driver of growth in demand for Canadian oil going forward as U.S. outlooks indicate that imports will represent a declining share of total U.S. energy demand, “offset by biofuels, higher fuel efficiency standards and suppressed by rising energy prices.”
But with global energy demand, led by emerging economies like China and India, set to rise towards 89 million barrels per day, the opportunity for Canadian crude producers is evident.
“China’s middle class is expanding so rapidly that it will soon be larger than the population of the United States. India and Brazil are also experiencing explosive middle-class growth. All these new consumers, all this upward mobility, is putting pressure on governments to deliver better jobs and living standards through economic growth. And that takes energy,” Prentice says.
With the world’s conventional oil production on the wane there is rising demand for heavier oils. However, Prentice says that won’t translate into a “free ride” for Canada’s oilsands industry.
“Environmental non-government organizations here, in the U.S. and in Europe continue to mount well-orchestrated anti-oilsands campaigns, and this continues to cast a shadow over the industry’s prospects,” he says.
Prentice adds that the recent nuclear crisis in Japan has raised new concerns over the safety of that power source and will likely result in a slowdown of new nuclear plants. “These factors represent risk and opportunity for Canada’s energy sector,” he says.
THE ONUS IS ON US
However, to reduce the risk and increase the opportunity, Prentice says that Canada needs to have credible data to defend itself from international criticism of its energy and environmental policy. He says the country hasn’t presented enough information to get to what he calls “first base’’ in the game of public opinion.
“Let me be categoric: neither industry nor the governments of Canada and Alberta can defend themselves in the absence of credible, science-based data that substantiates the fact that we are protecting the environment,” Prentice says. “As a country, we have not had data of that quality.”
Prentice points out that access to the U.S. market is facing tougher scrutiny by U.S. regulators and pressure is growing both at home and abroad to make the oilsands more environmentally sustainable.
“Canada will either be an environmental leader or have other jurisdictions dictate our environmental policies. It should be lost on no one that the president of the United States has spoken twice this spring about Canada’s environmental policies. The world is calling upon Canada to improve its environmental performance vis-a-vis the oilsands.”
The creation of a “world-class” monitoring system for the oilsands is vital and would go a long way in confronting concerns about the environmental performance of the oilsands industry, Prentice explains, adding, “This will allow the industry to get out in front of its critics by setting tougher targets and benchmarks with respect to impacts on water, air and land and by making the investments to meet those targets and by having data to prove success.”
Prentice identified other impediments that could affect Canada’s future oilsands exports to the United States:
• He said that 47 separate jurisdictions in the United States are now developing their own low-carbon fuel standards, which he characterized as an attempt to download American environmental compliance costs onto Canadian producers.
• The optimal flow of oil to Gulf Coast refineries is essential, he says, adding that these refineries were designed to process heavy crudes and are struggling to get sufficient volumes due to limited pipelines. As a result, getting regulatory approval for the Keystone XL pipeline project to the Gulf Coast is the most difficult impediment at the moment.
“Keystone XL is now subject to a further environmental assessment that will include upstream production, which happens to be our oilsands. As President Obama said publicly, ‘These tarsands, there are some environmental questions about how destructive they are…what are the dangers there, and we’ve got to examine all those questions,’” Prentice notes.
“This is a significant—and worrying—development for Canada. Canada needs to do everything it can to make sure Keystone gets a green light.”
