National Post (National Edition)
CANADIAN OIL STILL HAS A FUTURE
PRODUCTION HERE IS MORE STABLE, PREDICTABLE AS SHALE LOOKS MORTAL
There may not be a French translation for the word “chutzpah,” but that doesn’t mean that Bloc Québécois Leader Yves-François Blanchet can’t summon it. Case in point: his recent suggestion that the federal government shouldn’t prop up oil and gas businesses “that will not be self-sufficient in any time in the future.” You could almost hear Albertans choking on their indignation when he said that, given Quebec’s storied history of propping up businesses whose own lack of self-sufficiency is a matter of public record.
But he wasn’t alone in taking aim at the federal government’s support for Alberta’s favourite industry. Not surprisingly, outgoing Green Party Leader Elizabeth May joined the fray in arguing that, “Oil is dead and for people in the sector, it’s very important there be just transition funds.” In keeping with his campaign’s unofficial theme of making the least of every available opportunity, Conservative leadership hopeful Peter MacKay responded by asking how May and Blanchet travelled to Ottawa. This is the political equivalent of saying, “I know you are but what am I,” and while it might have thrilled his supporters who buy their “I ª Canadian Energy” T-shirts in bulk, it did little to dispel her and Blanchet’s argument.
That’s a shame, because their argument is actually full of holes — one that anyone who aspires to become prime minister should be able to find with ease. Oil, as it happens, is very much the opposite of dead. Yes, prices are down right now, and companies are hemorrhaging almost as much money as Canada’s airlines, but the future for Canadian oil and gas looks better than it has in years. America’s shale plays, which grew its combined production from under two million barrels per day in January 2010 to over nine million barrels per day this past January, are suddenly looking very mortal. Production there has already started to fall, and by the time it bottoms out it could easily shed as much as three million barrels per day of production. It will take years for it to recover to the levels it was at just a few months ago, and there’s no guarantee that it ever will.
That’s good news for Canadian producers, both because it will almost certainly lead to much higher oil prices down the road (Egyptian billionaire Naguib Sawiris recently suggested they could top $100 per barrel within 18 months) and because they’ve spent the last few years stress-testing their businesses. Unlike shale plays, where the wells come on fast and produce most of their oil within 24 months, Canada’s oilsands production is far more stable and predictable — and it has most of its costs already sunk. And with more than a million barrels per day of new pipeline capacity suddenly on the horizon, their costs are about to get even lower. It’s the tortoise to shale’s hare, in other words, and the hare may have finally run out of juice.
No, Canada’s oilsands won’t grow the way many predicted it would just a few years ago. The era of megaprojects is well and truly over, and there’s nothing that any government — not even Alberta Premier Jason Kenney’s — can do to change that. But there’s still a future that can include profitable operations for the companies, dividends for its shareholders and gainful employment for thousands of people, and we’d be foolish to pretend otherwise. The pipelines that will carry Canadian oil and gas to the West Coast, meanwhile, could one day be retrofitted to handle liquid hydrogen, a zero-carbon source of energy that Alberta just happens to be well-positioned to supply.
Unfortunately, our energy politics still seem like they’re stuck between two maximalist views of the future. In one, renewables are a flash in the pan, the inherent ethicality of our oil wins out and Alberta is made great again. In the other, the oilsands are forcibly wound down, employees are transformed into solar panel installers and everyone takes transit to work. Neither of these worldviews is realistic, of course, and they seem incapable of communicating with one another.
The truth is that the energy transition is going to be messy, imperfect and entirely unavoidable. Politicians that trade in fictions, either about oil’s immutable permanence or its imminent demise, aren’t helping Canada find its way forward through it. Blanchet, of course, has no real interest in helping Canada find its way through anything. But people like MacKay and May should know better. And if they don’t, maybe it’s time for Canadians to replace them with people who do.
IT’S THE TORTOISE TO SHALE’S
HARE.
Max Fawcett is a freelance writer and the former editor of Alberta Oil magazine. He worked in the Alberta government’s climate change office from 2017-19.