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Missed Part 1? Here it is – Policies and Dramatically Changing Partnerships
By Maureen McCall
As Canada faces the U.S. trade threat of a 100% tariff on Canadian goods if Canada proceeds to lower tariffs on Chinese imports, Alberta Premier Danielle Smith has amped up her campaign to promote Canada as an energy superpower and access global markets.
Alberta stands ready to increase supply to world markets, most notably the markets of East Asia -South Korea and China- as well as strengthening our trade relationship with the U.S., with the potential for deeper collaboration with U.S.refineries to enhance margins.
Speaking at a recent EnergyNow Insights Event of Canadian energy industry leaders and proponents at the Calgary Petroleum Club, in discussion with Tracey Bodnarchuk, CEO of Canada Powered by Women, Premier Smith declared “Canada can and should be a global energy superpower”, and she elaborated on strategies for Canadian pipeline development and Canada’s pathways to global impact.
An Energy Superpower with Global Impact
Tracey Bodnarchuk opened the discussion with Premier Smith by asking for clarification on the defining characteristics of a global energy superpower and how that definition may differ from Ontario Minister of Energy Stephen Lecce’s stated aspirations to be “a national, continental and global energy superpower.” Smith sees the energy aspirations of Canadian provinces from East to West as a strength.
“Everyone of us is able to talk about being a piece of the energy superpower,” Smith said. “I personally think that energy, oil and gas in particular, has finally been asserted as not just a transition fuel, but also a foundation fuel. Certainly, in the case of natural gas and the demand for oil, I think we’re now getting some proper projections around what that might look like. I know OPEC started that conversation a few years ago, talking about how, if we’re going to attack the twin problem of emissions and global poverty, you’re going to have to do that by developing our oil and oil resources. So they’re now talking about (producing) 125 million barrels a day by 2050. So I welcome the fact that we’re now having an honest conversation about where oil and gas fits into the mix… and being an energy superpower is all of the mix and all of the types of energy.”
Smith credits the change in the conversation about natural gas to the rise of Artificial Intelligence (AI) and its insatiable energy demand. She referred to a major conference on the subject of AI in the UAE and the discussion of the types of energies that could possibly fuel the demand. It was decided that nuclear was a clean energy option, but it has a 10-year time horizon to develop. The hydroelectric power option is not available everywhere, and when one looks at the long timeline for the Site C Dam in B.C.(initially proposed in the mid-twentieth century- the 1950s and completed in 2025), it’s not an easy pathway to get hydroelectric power development, according to Smith. Since AI requires 100% stability, Wind and Solar, with 10 and 30% intermittency, respectively, are not feasible.
“When you start looking at what is the most feasible way to roll out at scale- large power – to be able to fuel AI data centers with redundancy, you’re talking about natural gas backed up by batteries, backed up by diesel, Smith said. “So the chain that makes the most sense is still relying on traditional fuels.”
To echo Tracey Bodnarchuk’s comments, it’s hard to believe that a couple of years ago, we told countries that there was no business case for natural gas. Smith has reversed that messaging by dramatically increasing Alberta’s presence at global conferences and increasing advocacy for Alberta energy by meeting with leadership in the U.S., Saudi Arabia and Dubai.
“We’ve been doing a lot of our own advocacy with the United States, because the Americans thought their biggest supplier was Saudi Arabia. We surpassed them (Saudi Arabia) in 2014, and the Americans didn’t even know. Part of what we needed to do, especially with the change in leadership, was to work with our allies, the recipients of our Alberta oil. There are a lot of refineries that get 100% of their supply from us. If they didn’t get it from us, you’d be talking about shutting down refineries and having gas shortages. They are a very loud and vocal voice for Canadian energy. I think there’s an understanding in the administration.”
Pipelines- Dealing with the Domestic Barriers
Industry leaders are quite direct when describing domestic barriers to pipelines. Michael Binnion, President & Founder of Questerre Energy and Honorary Consul for Papua New Guinea, sees Canada’s dependence on the U.S. as problematic and advocates for pipelines to access global markets.
“Canada’s pipeline system was built to solve the oil market problems of the 1950s,” Binnion says, “…when the assumption was that the United States would always need Canadian oil to supply the middle of the continent. The Permian and Bakken shale oil fields mean that world no longer exists. Today, the old infrastructure design means Canada still depends on the U.S., even though the U.S. is no longer dependent on us – and that asymmetry is proving to be a real strategic risk. If Canada is serious about diversification, the obvious first step is reducing dependence on the United States for our single largest net export – crude oil. You don’t diversify by selling the same product to the same customer under worse terms – you diversify by building optionality and market access beyond one buyer.”
At the EnergyNow event, Danielle Smith recalled the challenges as recent as just three years ago- issues that Alberta had with the Federal Emissions Cap, Methane Regulations and Clean Electricity Regulations. She said independent agencies advised her government that if the regulations continued, Alberta would have to shut in 2.1 million barrels of production by 2035.
Smith said that the collective notion in Canada at that time was that we should promote more trade between provinces, which could help each other to get to new markets. She decided to test that idea by “bringing back the project that should have got built in the first place,” which was the Northern Gateway project – thereby testing B.C.’s intention to “help” another province like Alberta. She’s brought back the project proposal with a change to develop the safest port on the West Coast with immediate access to deep water – the Port of Prince Rupert.
Smith also discussed great lessons to be learned from companies like TC Energy and their success in building the Southeast Gateway Project, an offshore pipeline in Mexico.
“TC Energy, partnered with government,” Smith said. “They went offshore, and they built a 750, kilometer gas pipeline in three years from final investment decision to finish the fastest pipeline. Part of the partnership was that the government would take on the difficult task of making sure that the permitting and the community benefits issues were taken care of, and TC was able to focus on the technical aspect of the project. So if that’s the kind of thing that can be done in a very, very complicated environment like Mexico, by a Canadian company, surely we can replicate that and do something similar to the (West) Coast. That’s what we’re testing – to have the federal government work in conjunction with us, in partnership with the First Nations communities through our Alberta Indigenous Opportunities Corporation, and let’s just see if we can find a different way to do it. Our timeline is June. We hope to get a decision by the end of this year.”
Attendee Kevin Birn, Head of the Center of Emissions Excellence at S&P Global Energy Horizons, commented on the urgency of pipeline project approval and construction.
“With Western Canadian liquids expected to grow by half a million more barrels by 2030, incremental export capacity is needed,” Birn said. “For Canada, the prospect of perpetuating its current reliance on the U.S. market for demand, and as a potential conduit to reach international markets, is seen as increasingly risky compared to expanding routes wholly within Canada to diversify and reach international markets.”
Danielle Smith noted that, in addition to Northern Gateway, multiple other projects are being advanced. U.S. President Trump has expressed an interest in building the Keystone XL Pipeline, or some version of it. Other projects exist that could potentially go east, such as the oil by rail proposal going to Nova Scotia. Ontario Premier Doug Ford and Premier Smith signed an agreement to see if more oil could be shipped through the Great Lakes from Thunder Bay, or even have a bit of a skirt line going up to James Bay- routes to get Canadian oil to European markets.
“The two most important things that came out of the MOU for me, Smith said, “were the acknowledgement that we are not going to have an emissions cap and that they are not going to apply the net zero power regulations to Alberta. Those are the two things I’ve been fighting for the last three years, because both of them are limiting our aspirations. So maybe the way I look at it is that everyone is either a current supporter of oil and gas development or a future supporter of oil and gas development – we can find the area of common ground.”
Maureen McCall is an energy professional who writes on issues affecting the energy industry.
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