Carbon Corner: Can We Trump The Status Quo?

Make Canada Great Again

As 2017 approaches, the Canadian oil and gas industry is part of the national conversation like few times in our history. Our responsible, ethical, world leading industry is at risk of being permanently damaged by an orchestrated attack from radical environmentalists. Over the past decade, millions of dollars have been spent by well-organized, media savvy ENGOs to position Canada’s oil sands in popular culture as the focal point of climate change, dirty oil, and corporate greed. They have managed to place several of their key representatives, such as Tzeporah Berman and Gregor Robertson, in important government roles in Western Canada and are now using taxpayer dollars, in addition to their considerable private funding, to drag the Canadian energy industry through the mud in front of the world.

Carbon Corner: Can We Trump The Status Quo?

Ironically, at the same time, Canada’s oil and gas industry continues to lead the world in responsible and ethical production. The oil sands itself has seen a 30% reduction in carbon emissions per barrel since 1990, demonstrating the industry has been working on carbon reduction even before carbon reduction was cool. All told, Canada produces less oil per day than the state of Texas alone and amounts to 1.6% of global greenhouse gas emissions. Canada uses the royalties

from the sale of oil and gas to fund hospitals, schools, and parks, and the industry itself provides approximately 500,000 Canadians with jobs. Canadian technology and regulations for things like pipelines are used around the world as models of best practices in oil producing areas, and Canadian trained engineers, geologists, and rig workers are highly sought after. Yet, in our own country, there continues to be a very vocal, emotional, and prominent group of people who want to shut our industry down.

As Vivian Krause points out in her recent article, The Great Green Election Machine, it would appear Canada has been duped. Our country’s greatest virtues-selflessness, charity, responsibility, compassion—have all been taken advantage of using misinformation and celebrity culture to the point where Canadians are fighting amongst ourselves over a problem the rest of the world seems to have, based on their actions, bestowed on Canada and Canada alone.

Yes, many countries came together to ratify COP21 in Paris in 2015. Since then, however, the United States has lifted a 40 year ban on oil exports and built 16,000km of pipelines. China, while trying to reduce its dependence on coal, continues to build new coal facilities at a rapid pace. Germany, a country praised for its renewable energy policies, is moving back to natural gas in many areas due to high costs and inefficiencies in wind and solar. Nigeria continues to allow the uncontrolled release of methane from its production facilities. Saudi Arabia, the world’s wealthiest oil producer, continues to see class and wealth inequality on a scale unheard of in Canada. The actions do not match the words.

There is a role for Canadian oil and gas in global markets, even though the world will continue to shift toward renewable and lower carbon energy forms and as clean technology evolves over the coming decades. Canada’s role should be to offset and displace environmental laggards in oil and gas production not be shut down from participating altogether.

In 2017, we are forecasting a modest increase in the amount of wells and a WTI price of between $40-$60 USD. Given the climate described above, the Canadian oil and gas industry has an uphill battle ahead even with a recovery in the price of oil. The recent election of Donald Trump in the United States, however, could be seen as a huge opportunity for Canada. Trump has stated, on multiple occasions, his support for Keystone XL and favoured approving the pipeline within his first 100 days as President. Our Prime Minister should be using his first meeting with the new President to reinforce Canada’s support

for North American energy security, which requires Canadian oil to have greater access to the US market. Keystone XL would provide an additional one million barrels per day of Canadian crude to the US and significantly reduce current price differentials. It would mean better profits for Canadian companies, higher revenues for Canadian governments, and more jobs for Canadian workers.

Additionally, the election of Trump should force the federal and Alberta government to reconsider their position on carbon pricing. The new Trump administration and Republican controlled congress will likely move the United States away from Obama’s commitment to the Paris Agreement on climate change or, at the very least, significantly slow its progress. As a result, Alberta’s new carbon tax will no doubt push capital away from Canada toward oil and gas investment opportunities south of the border.

Contrary to what our detractors would like us to think, the oil and gas industry is not dying. The International Energy Agency (IEA) forecasts the world will consume almost 40% more energy by 2040, and fossil fuels will make up 75% of the energy mix. This energy growth will be driven, almost entirely, by the emerging economies of Asia, the Middle East, Africa, and Latin America, which are home to more than four-fifths of the world’s population and a rapidly expanding middle class.

In 2017, there are huge opportunities for our sector, but in order to realize these opportunities, a few things must happen. First, federal, provincial, and municipal governments need to seriously address business competitiveness in the face of incredible changes in American politics. They must accept our industry is important and recognize it is crucial in providing jobs and tax revenues for all Canadians.

They must start treating our industry, and the people and families who rely on it, with respect. They must understand Canada’s role in transitioning toward whatever the future of energy may be. They must realize transitioning from a position of financial strength and technical ingenuity will enable us to continue to be an energy leader able to produce, consume, and export affordable, reliable energy so we do not become an energy follower forced to rely on others for supply and paying prices we have no control over. They must approve pipelines and allow our world-class products to be sold on the world market for the benefit of everyone involved.

Secondly, Canadians who support and understand our world-class oil and gas industry must work hard to share the truth about what we do. Rather than dying, our industry is evolving, improving, and staying competitive as it always has. We must work hard to show the rest of the country and the world why we are the best and why our industry is so important to our quality of life and high standard of living. We need to be unapologetically proud of what we do and not let our detractors continue to carry the conversation.

The status quo will not provide Canadians with a strong economy and high paying jobs nor will it encourage them to stand behind our industry with support and compassion. The year 2017 can be a year that sets Canadian oil and gas apart for what it really is. Let’s work together to make it happen.

Mark A. Scholz
President
Canadian Association Of Drilling Contractors

Originally published in the

Date Published	December 23, 2016
Company	Canadian Association of Drilling Contractors
Article Author	Mark A. Scholz
Article Type	December 2016 Issue
Category	Articles, Carbon Corner
Tags	Carbon Corner, Carbon Emissions, Carbon Tax, E&P, Environmental, Oil & Gas Future, S&S
HUB SEARCH	CAODC

Carbon Corner: Can We Trump The Status Quo?

Carbon Corner: Can We Trump The Status Quo?

Make Canada Great Again

December 2016 Issue of Oilfield PULSE