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And a new report supports a new oil pipeline
TC Energy CEO François Poirier, with Alberta Premier Danielle Smith in Washington DC in January
By Resource Works
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After 10 years of federal reluctance to push energy exports, the government of Prime Minister Mark Carney has been signalling things will change.
And now comes a new outlook from the Canada Regulator that sees our natural-gas use, driven by LNG exports, growing by 47 per cent by 2050, and perhaps as much as 75 per cent.
The Canada Energy Regulator outlook
The federal agency’s new “scenarios” envisage a future in which:
- Energy demand could be 12 per cent higher by 2050 (though as much as 10per cent lower if Canada looks for ‘Canada Net-zero’ by improving energy efficiency and adopting more efficient electric technologies).
- Crude oil production increases in the near term for all scenarios, with increases of 6.5per cent to 11per cent by 2030. Even in the agency’s greenest scenario, oil production goes up by 3.64per cent.
- Natural-gas production increases in all scenarios, from a record high of 18.3 billion cubic feet a day (Bcf/d) in 2024. Growth could hit as much as 32 Bcf/d in 2050 (up some 75per cent from 2024). And even in the most optimistic scenarios output could still be around 21 Bcf/d in 2050, up by close to 15per cent from 2024.
- Electricity shows the largest percentage increase in demand from 2023 to 2050 ranging from 26per cent in the lowest scenario to 84per cent in the Canada Net-zero model.
- Greenhouse gas (GHG) emissions fall throughout the projection period in all scenarios, with reductions ranging from 21per cent to 35per cent lower than 2005 levels. (Net emissions reach zero in 2050 in the agency’s Canada Net-zero model, “which is not a projection, but a pre-determined constraint on this scenario.”)
Fossil fuels used for non-combustion purposes (such as petrochemical feedstocks, asphalt, and lubricants) grow in all of the agency’s scenarios.
Fossil fuels used for combustion fall in demand due to shifts towards biofuels and electricity, driven by federal policies. By 2050, some demand for combustion remains, but from processes equipped with carbon-capture or where emissions are offset by other sectors.
Biofuel demand also grows in all of the regulator’s scenarios, and hydrogen becomes a bigger part of the mix.
The economic prize of new pipelines
The regulator’s outlook for LNG exports comes as the prime minister paints a picture of Canada as a future “superpower” exporter of energy.
And he has, among other things, opened the political door for a new oil pipeline to the Pacific coast.
As Resource Works columnist Nelson Bennett notes there is “no way a new West Coast pipeline can be built in time to meet the current crisis” of energy disruption generated by the war on Iran.
But he quotes Rory Johnston of Commodity Context: “There’s always going to be a next crisis. So we need to start investing to better prepare for optionality and flex in our system to be able to contribute in the future.”
And now a new study by ATB Economics and Studio.Energy says new oil pipeline capacity could generate a massive bump in investment, increase exports and create more jobs:
- By adding 1.5 million barrels per day of new pipeline capacity out of Western Canada, the country would see annual real gross domestic product (GDP) rise by an estimated $31.4 billion, or 1.1 per cent on average, between 2027 and 2035.
- More pipelines, the proposed Pathways carbon-capture network — a federal prerequisite for building a new oil artery to the Pacific Coast — and increased industry investment to fill the lines would support 112,000 additional jobs, on average, during the same time frame.
“There’s a big prize here, in terms of boosting investment and creating long-term economic prosperity,” says energy economist Peter Tertzakian, founder of Studio.Energy.
Chief economist Mark Parsons of ATB Economics, part of ATB Financial in Alberta, adds: “I can’t think of anything else that would give such a large jolt to the Canadian economy over a 10-year period.”
The report looks at the economics of the Alberta government’s proposal to build a new oil pipeline that could ship one million barrels per day to tidewater for export, along with plans by Enbridge, Trans Mountain Corp. and South Bow Corp. to increase capacity on their own pipeline systems.
The study assumes about half-a-million barrels of new export capacity will come online by 2035 from those systems, along with a greenfield pipeline that Alberta is examining.
Filling these lines would require another $100 billion or more of spending to hike production, and an estimated $20 billion for the Pathways carbon-capture project.
“We get a significant impact from the build-out, the construction of the pipelines and filling the pipelines . . . and then, as construction winds down, we get the lift from export,” said Parsons.
“It’s that one-two punch that’s been missing in the Canadian economy.”
The regulatory speed bump
Amid that enthusiasm, though, CEO François Poirier of TC Energy says Canada’s process for approving energy projects is still far too slow, despite PM Carney’s efforts to reform it.
Poirier called on Ottawa to offer a six-month timeline to energy companies applying for key permits.
Carney opened the new Major Projects Office last year to accelerate proposals to approval within two years (in the past it has sometimes taken 10-12 years) but Poirier said that’s not competitive in a world where energy demand is rising.
““We’re competing for international customers to deliver them LNG,” said Poirier. “We want to diversify beyond the U.S. We don’t get to pick the timelines.”
He said TC Energy was able to get permits in only seven months for its Southeast Gateway natural-gas pipeline in Mexico, “and I assure you no environmental corners were cut.”
TC Energy transports about 30per cent of the natural gas in North America. The huge power requirements of data centres mean TC Energy could add billions of dollars of new projects in the U.S. to feed the centres.
But Poirier said: “it’s challenging right now, given the permitting timelines, for infrastructure to be built quickly enough to keep up with the demand growth.”
Don MacLachlan is a writer for Resource Works, a non-partisan organization that champions responsible resource development in British Columbia and Canada. Reach him via [email protected]
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