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Chris Varcoe: However, there are plenty of kilometres still to go in this marathon — and no assurances how the race will play out
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The president of Canada’s largest petroleum producer expects the country’s oil pipelines will fill up within the next decade — and believes a new one should be included on the Carney government’s major project list.
Canadian Natural Resources President Scott Stauth would also welcome a massive carbon capture network in the oilsands making it onto the federal list — part of what Premier Danielle Smith says could be part of “grand bargain” to also advance a greenfield pipeline.
However, there are plenty of kilometres still to go in this marathon — and no assurances how the race will play out.
Oilsands producers want several federal policies changed, allowing them to increase output that could fill a new multibillion-dollar pipeline.
“I do believe Canada will need a new oil egress pipeline within the next five to 10 years. And I think it’s important the government continue on the path that they have, to consider a pipeline,” Stauth said in an interview Thursday.
“It does need to be on the major projects list in order to be part of the Bill C-5 that they’ve put into legislation . . . To me, they go hand in hand.”
Canadian Natural, which released its second-quarter earnings Thursday, produced 1.42 million barrels of oil equivalent per day in the April-to-June period, and is one of six members in the Pathways Alliance
The consortium, which operates about 95 per cent of oilsands production, has proposed building a $16.5-billion carbon capture network in Alberta.
It would connect more than a dozen facilities, through a pipeline, to an underground CO2 storage hub near Cold Lake, but has not received a green light from the companies.
The federal Liberal government recently passed Bill C-5, which expedites projects of national significance. Alberta’s premier has said both developments should be included on the major projects list, an idea Prime Minister Mark Carney appears to be considering.
However, Smith’s idea of building a new million-barrel-a-day oil pipeline to the Pacific Coast — and doubling Alberta’s oil and gas production in the future — is ambitious. And no private sector proposals for a greenfield pipeline are on the table, yet.
Producers point to federal policies that would need to be ditched or overhauled to encourage significantly more output for a new pipeline.
Those include the emissions cap on the oil and gas sector, federal methane regulations and an oil tanker ban off the northern coast of British Columbia.
Stauth said Bill C-5 is important for the country and stressed Canada needs to ensure regulations hampering oilsands growth are altered to attract investment.
“We need those policies changed,” he said.
“It’s not good enough just to have a pipeline built. Production has to be able to fill that pipeline, and the regulations are impacting the ability to fill that pipeline.”
With the startup of the Trans Mountain expansion last year, there is sufficient pipeline capacity out of Western Canada to meet growing output in the short term.
Pipeline giant Enbridge and Trans Mountain Corp. have also discussed incremental ways to optimize their existing systems.
However, S&P Global Commodity Insights forecasts an additional 500,000 barrels per day of oilsands output is expected by 2030.
In an interview last month with the Calgary Herald, the prime minister said “it’s highly, highly likely that we will have an oil pipeline that is a proposal for one of these projects of national interest.”
He suggested the Pathways Alliance carbon capture project could also merit a spot on the list.
The producers group has been planning and designing the carbon capture project for several years, but maintains it will require more incentives from the federal and provincial governments to proceed.
“We’re supportive of both the projects (Pathways and an oil pipeline) going off at the same time. It’s important for our egress . . . and it’s also important to us to have carbon capture at our oilsands,” Stauth added.
“To the extent that it’s a grand bargain, our view is it’s important to us to have both of those opportunities come to fruition.”
Recent opinion polls show majority support among Canadians for building new pipelines, particularly as the country faces U.S. tariffs.
Meanwhile, the pipeline debate continues to churn.
On Thursday, the Ontario government teamed up with Alberta and Saskatchewan, issuing a request for proposals for a new feasibility study to examine options for a new energy and economic corridor between Western and Central Canada. This would include the potential of oil and gas pipelines between Alberta and Ontario.
In Calgary, federal Conservative Party Leader Pierre Poilievre called on the Liberal government to ditch the tanker ban, Impact Assessment Act and the oilpatch emissions cap.
He wants to see shovels in the ground by next March on at least two major pipelines, a new LNG export initiative and a road to the Ring of Fire mining deposits in northern Ontario.
“We can’t wait till everybody’s on side,” the Conservative leader told reporters.
“You’re going to need national leadership.”
Gregory Frame, a spokesman for federal Natural Resources Minister Tim Hodgson, said the federal government is focused on economic competitiveness “and moving rapidly to build Canada into an energy superpower.”
While there’s plenty of talk about pipelines and Pathways, it remains to be seen how far the federal government will go to back new energy projects, or how much opposition it’s prepared to withstand to move forward with such development.
Oilsands producers will continue growing if there’s sufficient pipeline capacity ahead, but only in “a very measured way,” said Menno Hulshof, managing director of equity research at TD Cowen.
“I think it would require very strong assurances from the feds on a lot of different fronts in order to get bigger shovels in the ground,” Hulshof said.
“I’m pretty comfortable in saying that it’s not going to be a simple exercise.”
Chris Varcoe is a Calgary Herald columnist.
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