Alberta Oil - - CONTENTS - NICK WIL­SON nwil­son@al­ber­taoilmagazine.com

The shift­ing sands of en­ergy pol­i­tics and eco­nom­ics call for some cre­ative foot­work


prices. The good news was that OPEC wasn’t happy ei­ther. OPEC (read: Saudi Ara­bia) has been hold­ing the heads of its archri­val Iran and North Amer­i­can pro­duc­ers un­der the wa­ter while us­ing its vast dol­lar re­serves to dive deeper and hold its breath longer. But the king­dom’s rulers, the House of Saud, are com­ing up for air. They can hear their so­ci­ety’s and economy’s cracks creak­ing un­der the self-in­flicted stress test: ri­ot­ing un­paid work­ers in the Holy City of Mecca; civil ser­vant salaries slashed; rest­less Shias in the Eastern oil prov­inces who look across the Per­sian Gulf to their co-re­li­gion­ists in Tehran for sal­va­tion in­stead of Riyadh; and mil­lions pushed deep into poverty. Fi­nally, “the world’s cen­tral bank of oil” looks set to close the spig­ots.

Closer to home is an­other self­in­flicted stress test that strained the in­dus­try this year: car­bon pric­ing. Depend­ing on whom you lis­ten to, it’s ei­ther a trade-off for pipe­line per­mits— the price of doing busi­ness when you pur­chase a so­cial li­cense—or a gi­ant tax grab that will drive in­vest­ment over­seas to ju­ris­dic­tions that have lower-al­ti­tude play­ing fields. The oil gi­ants and fed­eral and Al­ber­tan gov­ern­ments think it’s the for­mer. Saskatchewan and smaller com­pa­nies tend to see it as the lat­ter. Prime Min­is­ter Justin Trudeau ratch­eted up the ten­sion when he de­cided to drive through a na­tional car­bon price of $10 per ton, kick­ing in in 2018 and ris­ing $10 each year to $50 by 2022— $10 higher than Al­berta and Bri­tish Columbia’s car­bon taxes.

In the dis­tance, barely no­ticed through the smoke of the en­su­ing po­lit­i­cal bat­tle, was Cana­dian Oil Sands In­no­va­tion Al­liance rais­ing the flag of its 2040 tar­get—a car­bon neu­tral bar­rel of oil—lit­er­ally tak­ing car­bon out of the bar­rel to turn it into com­mer­cially vi­able prod­ucts. COSIA be­lieves in Al­ber­tan oil sands pro­duc­ers’ abil­ity to in­vent and adapt. This was the year of con­stant in­no­va­tion—cut­ting costs and cut­ting emis­sions—as com­pa­nies piv­oted to sur­vive.

Or thrive, in Sun­cor En­ergy’s case. This is a com­pany that has grabbed the car­bon bull by the horns and heads vig­or­ous oil sands clean-up operations and pro­duc­tion ef­fi­ciency drives. Buy­ing Mur­phy Oil’s five per­cent stake in the Syn­crude oil sands project for $937 mil­lion, took Sun­cor’s stake to 54 per­cent. Three months ear­lier Sun­cor had bought out an­other Syn­crude part­ner, Cana­dian Oil Sands for $6.6-bil­lion, fol­low­ing a hos­tile takeover bat­tle. When Sun­cor CEO Steve Wil­liams con­fi­dently said, “We ex­pect to be the last oil com­pany stand­ing,” his hy­per­bole wasn’t about the gloom and doom of early 2016— he was op­ti­misti­cally look­ing to the fu­ture. Canada’s fu­ture.

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