The Big Pic­ture

There is a re­newed ur­gency within the en­ergy sec­tor to make its busi­ness model more sus­tain­able, whether through new roy­alty reg­u­la­tions, op­er­a­tional in­no­va­tions or smarter fi­nanc­ing prac­tices

Alberta Oil - - CONTENTS -

A wide ar­ray of so­cial forces – en­vi­ron­men­tal reg­u­la­tions, in­no­va­tions and eco­nom­ics – are all tug­ging at the in­dus­try. And all are try­ing to pull it down the same path – to sus­tain­abil­ity

THE WORD “SUS­TAIN­ABIL­ITY” CAN SOUND LIKE

an oxy­moron when used in re­la­tion to non-re­new­able re­source de­vel­op­ment. Af­ter all, fos­sil fuel re­serves are ul­ti­mately fi­nite; so by its purest def­i­ni­tion, the de­vel­op­ment of oil and gas is not a “sus­tain­able” busi­ness. On a long enough time­line, fos­sil fuel re­serves will the­o­ret­i­cally run dry.

But peo­ple in­side the en­ergy sec­tor typ­i­cally don’t mean to sug­gest that oil and gas pro­duc­tion is an ever­last­ing op­por­tu­nity. Rather, talk of sus­tain­abil­ity tends to in­clude the ad­jec­tive “more” – that is, how can in­dus­try im­prove its pro­cesses to pro­long its ex­is­tence and be­come “more sus­tain­able,” amid an in­creas­ingly com­pet­i­tive mar­ket. Cur­rently that ex­is­ten­tial ques­tion is fore­most in the minds of en­ergy ex­ec­u­tives.

There are sev­eral ex­am­ples of how in­dus­try is striv­ing to be­come more sta­ble and pre­dictable. Steam-as­sisted grav­ity drainage (SAGD) oper­a­tors are chip­ping away at tech­nolo­gies that could vastly cut back on the costs of steam gen­er­a­tion to re­duce both wa­ter con­sump­tion and car­bon emis­sions. Com­pa­nies are look­ing at ways to main­tain low costs even in the event of high com­mod­ity prices in the fu­ture, which would mit­i­gate against the volatile cy­cles of com­mod­ity prices. Part of the sus­tain­abil­ity equa­tion also falls upon govern­ment: Al­berta has, since last sum­mer, an­nounced an econ­o­my­wide car­bon tax, put a cap on car­bon emis­sions from the oil sands and held a roy­alty re­view in the hopes of gain­ing trust from the pub­lic and curb­ing the prov­ince’s emis­sions pro­file.

Such changes are im­ma­te­rial in iso­la­tion. But by com­bin­ing in­no­va­tions and smarter reg­u­la­tions in all aspects of the busi­ness – from im­prove­ments in op­er­a­tions to im­prove­ments in fi­nance – in­dus­try is mak­ing its way to be­com­ing more sus­tain­able.

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