2022 Year-End Energy Review – A Year of Disruption – Deidra Garyk

Disruption is happening in the energy sector, and Canada’s oil and gas companies have an opportunity to lead the energy future. We have weathered the storm so far and will continue to do so.

Whether it is supply chain disarray, inflation caused in part by high energy prices, energy security hurdles due to sanctions on Russia because of their invasion of Ukraine and a blown up pipeline (Nordstream) – a real whodunnit, or burdensome energy policy and regulations in Western nations, 2022 was defined by disruption.

People who hate fossil fuels threw soup and honey at paintings and blocked roads, demanding the “filthy” product be left in the ground.  Still, the public demand grew and grew, and the dis-incentivized supply could not keep up.

The price of oil and natural gas skyrocketed as the world was beginning to open up to COVID lockdown-weary citizens who threw caution to the wind and began spending their hard-earned COVID bucks. Inflationary pressures and supply chain disruptions quelled consumption, as did China’s COVID zero policy, but not enough to meaningfully disrupt demand.

Canada stuttered and stumbled, due in large part to poor government policy – we couldn’t even make a business case to supply LNG to Germany, a country that has spent almost half a trillion dollars since the Ukraine war started in February to find a replacement to Russian energy supplies. Not that we could have got the gas to them in time.

With a near singular focus on carbon emissions by the governing Liberal Party of Canada and its proppant the NDP, one cannot talk about oil and gas disruption without talking about Canada’s political climate. They are interwoven with unbreakable bonds until the next election.

Prime Minister Justin Trudeau has a laser focus on climate change, blaming the burning of oil, gas, and coal, and he wants these energy sources disrupted – at all costs. No plan is too small or too unrealistic to coerce compliance.

Be it through newly announced proposed regulations requiring that 100 percent of new cars sold in Canada be zero emission vehicles (ZEV) by 2035.

StatsCan’s own 2021 data shows that 94.9% of all registered light-duty vehicles were gasoline. Seems like there is not quite the uptake in EV’s the government demands.

“Change is here!” December 20, 2022, Canada proudly banned certain single use plastics – checkout bags, cutlery, foodservice ware, stir sticks, and straws.

Hate to break it, but the entourage that showed up at COP15 in Montreal from December 7 – 19, 2022 just blew the emissions savings out of the stratosphere.

FEDERAL CLIMATE AND ENERGY REGULATIONS

With a litany of other climate and energy regulations in various stages of implementation, the federal government was busy in 2022 doing its best to disrupt the oil and gas industry. Some of the most cumbersome include:

• The proposed emissions cut and cap on the oil and gas industry using two potential regulatory approaches:
• The development of a new cap-and-trade system under the Canadian Environmental Protection Act, 1999 (CEPA). In other words, a carbon market to trade offsets or credits, but, uniquely, only among those in the oil and gas industry.
• The modification of existing carbon pollution pricing systems under the Greenhouse Gas Pollution Pricing Act (GGPPA). In layman’s terms, an increased carbon tax specific to the oil and gas industry.
• Reducing Methane Emissions from Canada’s Oil and Gas Sector calling for a 75 percent reduction in methane emissions by 2030 relative to 2012 levels
• Finalization of the Clean Fuel Regulations
• Carbon tax, going to $170/ tonne of CO2e by 2030, increasing by $15 each year
• Just Transition– programming and legislation to transition those who work in the fossil fuel sector to new jobs in a net-zero economy

INTERNATIONAL ESG DISCLOSURES

It is not only the federal government that is disrupting the energy sector. New international sustainability and ESG (Environmental, Social, and Governance) disclosure standards are in the works and are expected to be adopted by Canadian regulators. The requirements are going to disrupt businesses a lot, in all sectors, even those that are privately owned. Companies that cannot report their climate and sustainability impacts to their publicly traded customers may lose their supplier status.

Disruption is not always bad. Voluntary ESG disclosure requirements called on the oil and gas industry to look for ways to reduce emissions, and the industry answered.

If every company and industry is judged equally and fairly, Canadian oil and gas has an opportunity to showcase that it is being a good corporate citizen and is working to improve its already stringently regulated environmental practices.

LABOUR MARKET DISRUPTION

Now that commodity prices put companies back in the black, the industry is feeling the effects of the disruption to available labour – it is difficult to find enough people to do the necessary work in the field.

It is not surprising. Between lack of job security and derogatory attacks – man camps, dirty oil, old white boys club – oilfield workers have sustained for years, it is no wonder people have decided to go elsewhere. I have even been called a fascist and murderer online for my public support of the industry, and that isn’t fun.

Nonetheless, that has not stopped the many great men and women who work in the patch from showing up – rain, shine, or -45 windchill – to do their jobs with competence and pride. We need you and we value you.

The energy disruption may make things seem bleak and uncertain, but there is reason to feel optimistic about our energy future. We are hearing a different discussion – we are allowed to debate the merits of all energy sources and we are allowed to acknowledge the shortcomings of the pious renewables (wind and solar).

For the first time in a long time, we are having uncomfortable conversations about important topics such as energy security and affordability. This is all positive.

About Deidra Garyk

Deidra Garyk has been working in the Canadian energy industry for almost 20 years. She is currently the Manager, ESG & Sustainability at an oilfield service company. Prior to that, she worked in roles of varying seniority at exploration and production companies in joint venture contracts where she was responsible for working collaboratively with stakeholders to negotiate access to pipelines, compressors, plants, and batteries.

Outside of her professional commitments, Deidra is an energy advocate and thought leader who researches, writes, and speaks about energy policy and advocacy to promote balanced, honest, fact-based conversations.

 

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