Kenney predicts oil, gas shortage when global economy rebounds
EDMONTON COVID -19 has put Canada in a “deep fiscal hole,” and the only way to get out of it is to spark the oil and gas sector, Premier Jason Kenney said Friday.
Noting the federal government’s announcement Wednesday it expected to post a $343-billion deficit, Kenney expressed optimism that demand for oil would bolster Alberta’s recovery.
“When the global economy comes back from COVID, when demand returns for oil and gas, we are going to see something of a supply shortage, because of the upstream exploration that has been cancelled,” he said at a Friday news conference.
“So we’ll see prices go up, and that will be a great opportunity for Alberta especially as we make progress on pipelines,” Kenney said.
At Friday’s market close, West Texas Intermediate crude was priced at just over US$40.
TC Energy’s Keystone XL pipeline, which the government of Alberta has committed $7 billion in financial support, faced a legal hurdle this week when the U.S. Supreme Court refused to let construction begin on the project.
“Continued obstruction of pipelines and energy projects is simply not an option for any government that is serious about economic recovery,” said Kenney.
The province also needs to draw investment back, and that will require demonstrating progress on environmental responsibility, a goal the premier believes Alberta could achieve through innovations in the oil and gas sector.
Kenney was at the Shell Quest Carbon Capture and Storage (CCS) Scotford Complex near Fort Saskatchewan for an announcement the facility had stored five million tonnes of CO2 at a lower cost than expected — about 35 per cent of what was estimated by Shell in 2015.
The Quest facility captures and stores about one third of the CO2 emissions from the Shell operated Scotford Upgrader near Fort Saskatchewan, which turns oilsands bitumen into synthetic crude that can be refined into fuel and other products. The CO2 is transported through a 65-kilometre pipeline and injected more than two kilometres underground below multiple layers of impermeable rock formations.
Quest received $865 million from the governments of Canada and Alberta when Stephen Harper’s Conservatives and Ed Stelmach’s PCS were in power to build and operate the facility, which started operating in 2015.
Kenney said sequestering five million tonnes of carbon over five years was “great environmental news.” His UCP government has been sharply criticized for temporarily suspending some environmental monitoring and reporting during the COVID -19 pandemic.
Michael Crothers, president and country chair of Shell Canada Ltd., said at the announcement the project was part of the energy company’s plan to become net-zero in carbon emissions by 2050 or sooner. “Widespread adoption of CCS is one of the solutions the world needs now to address the climate change challenge.”
Kenney said he was a skeptic of the unproven technology a decade ago because of its costs, but Quest showed the province would need to take calculated risks to advance innovation.
When asked why the Alberta government was not equally committed to supporting renewable energy and the AI and tech sectors, Kenney said it would be launching an innovation tax credit and its TIER program, funded by carbon emitters, incentivized carbon emission reductions like carbon capture and storage.
Kenney also addressed concerns that plan was too focused on typically male-dominated industrial sectors. He said Alberta reopening its hospitality and tourism sectors more quickly and broadly than in other parts of Canada has been helpful for getting women back to work, and pointed to his government’s four-year $10-million support for the Women Building Futures program and agenda to get more women and young people into skilled trades.
Education Minister Adriana Lagrange will announce measures soon to ensure schools open in September, the premier said.