More Canada, Please.
Written by: Steve Laut
Published in: The Hitch – Winter 2019 Edition. Pg 8
More Canada, Please.
THANKS EVERYBODY for coming here today. Let’s start off with energy and climate. I suspect that those of you from outside Alberta are thinking ‘you’re an oil and gas guy talking about climate change…in Alberta… this probably isn’t going to be very positive.’ That is the common perception and it’s reinforced by the oil and gas sector’s detractors and it’s constantly played in social media and mainstream media.
So today, I have a very positive story on climate change ; a huge opportunity for Canada, the oil and gas sector, and how Canada can make a significant difference in the world. This is a unique and unprecedented leadership opportunity for Canada. It’s an opportunity that I’m very excited about. It’s an opportunity that Canada should not and must not miss.
The opportunity has been created by the Canadian oil and gas sector’s ability to leverage technology, innovate, and more importantly, use Canadian ingenuity to create tremendous economic and environmental value. We’ve delivered a very impressive success story; Canadian Natural Resources and the entire Canadian oil and gas sector has delivered game-changing environmental performance. Canada’s energy sector recognized the need to reduce GHG emissions and we have delivered impressive results. Essentially, we’ve taken what was branded as high intensity oil back in 2009 and made a product that’s considered premium oil on the global stage today. We’ve accomplished this within ten years and the Canadian oil and gas sector is committed to doing even better in the future.
The game-changing performance of Canada’s energy sector has created a tremendous opportunity for Canada and it hinges on Canada taking a global perspective on climate change. By embracing the opportunity that a global perspective creates, Canada can be a world leader when it comes to climate change. After all, climate change is a global issue, not just a Canadian one.
From a global perspective, Canada makes a significant impact – a positive impact – on reducing GHG emissions and reducing global poverty. We’ll unleash Canadian ingenuity. We’ll support economic and environmental balance. We’ll create a massive amount of well-paying jobs. We’ll support investment in low-carbon energy use. We’re going to nation build, and make the world – and Canada along with it – a better place.
As I said earlier, Canada will become a world leader on climate change. We can drive a cycle of economic, environmental, and social performance while making Canada a stronger and more cohesive nation. The opportunity for Canada to make a significant difference on climate change, reduce global poverty, and at the same time create hundreds of thousands of jobs across Canada is a once in a lifetime opportunity.
But first, let me step back and we’ll take a look at he big picture… the world needs energy and will need a lot of it – all types of energy. It’s going to need renewables, fossil fuels, nuclear, biomass, and hydro. As I’ll discuss today, the world needs Canada’s energy more now, than ever before. Population growth will drive increased energy consumption. The middle class is growing and that drives energy consumption. We also need to get a very large portion of the world’s population out of poverty. And as Fig. 1 shows, to achieve better standards of living and better outcomes more energy is required, energy that is affordable and readily available.
Another way to look at it, human development is fuelled by energy. Canada and the rest of the industrialized world (which has about 1.4 billion people or about 20% of the Earth’s population today) has the longest life expectancy, the highest level of education, and the lowest rate of air pollution deaths. And, of course, we use the most energy. The West uses the equivalent of 34 barrels of oil per person per year of all types of energy. Roughly half the world’s population uses less than four barrels per person per year. And yet if just half that population are given access to affordable energy and lift themselves out of poverty to levels just as the same as the second quartile (which includes China, Turkey, Mexico, and Brazil), the world would need 27% more energy to do that.
And for those countries in the second quartile who are only half way to where the West is today, combined they would need 53% more energy. The world needs more energy, it needs a lot of energy, it needs all types of energy, and it needs energy that is affordable.
The top six goals of the United Nations’ 17 Sustainable Development Goals are: poverty, hunger, health, education, gender equality, and clean water. Affordable clean energy is ranked 7th and has a big impact on their ability to achieve the first six goals. As does climate change, which is ranked 13th.
Just for reference, there are parts of the world that collect dung – gathered by mostly women and girls – to provide energy they need. Affordable oil and natural gas allows girls to go to school and women to participate in higher-valued work. Affordable energy impacts gender equality as well.
The forecast for energy demand that is well below the 2-decgree Celsius scenario is relatively flat from 2016 onward. Renewable energy goes up significantly and natural gas rises by 13%. So that’s the low carbon intensity mix. Oil and gas is still significant in 2040 at 70M barrels per day and the world still meets the 2-degree goal. The December 2018 UN report --- the one that got all the media coverage that the world has to get off hydrocarbons to meet the more stringent 1.5C scenario – interestingly has the median oil demand falling to 60M barrels per day by 2040. So just 10M barrels per day lower than the previous forecast. So even in the UN’s more stringent 1.5C scenario, oil is still a significant part of the future. And surprisingly from a climate change perspective, coal is still hanging in there. Why? Because coal is the most affordable alternative and the world needs affordable energy.
In fact, in 2017, coal consumption in the world grew by 1.7%. Demand for oil and gas consumption also grew in 2017 and 2018 because oil and gas are also affordable. Both the UN and IEA forecasts project total energy demand to be flat, which means the world is going to have to get significantly more energy efficient. This will happen, but unlikely to the levels needed. So the energy map is likely going to go up … at least I hope it does, otherwise half the world’s population using four barrels or less will not see their standard of living increase; something most, if not all, Canadians would say is not acceptable.
Now, natural gas is a big feedstock supplier of petrochemicals but what many people don’t realize is that about 25% of every barrel of oil produced is not used for fuel. It’s used for pharmaceuticals, eyeglasses, plastics, tires, and thousands of other products that are essential to our daily lives. In fact, this is the area of oil demand that is growing the fastest. We need oil and natural gas for more than just energy. So the world needs lots of energy, and because of affordability, natural gas is going to be an even bigger share. Oil’s share, however, will remain significant as well.
And if the world is to help millions of people get out of poverty and successfully address climate change, who should supply that oil and natural gas? Should it be those jurisdictions that can produce it with the highest standards, the lowest GHG emissions and intensities, and at the lowest cost? This bring me to the Great Canadian Success Story, the one the entire oil and gas sector has achieved and has more room to do even more. It’s a success story that I believe everyone in Canada should be very proud of. I know I am.
Canada’s energy sector recognized the need to reduce GHG emissions and we’ve been able to leverage technology and Canadian ingenuity to deliver impressive results. Canadian Natural ourselves have invested $3.4B in research and development since 2009, that’s industry leading investment in Canada.
For instance, at Canadian Natural’s oil sands mining and upgrading operations, we’ve reduced our GHG emissions intensity by 37%. At today’s production levels, that’s equivalent to taking 665,000 cars off the road. In our primary heavy oil operations, through technology and continuous improvement, we’re reduced our methane emissions by 78%, that’s the equivalent to taking 930,000 cars off the road.
Canadian Natural also captures and sequesters the largest amount of CO2 in Canada and we’re the third largest in the global oil and gas sector; that’s the equivalent of taking 576,000 cars off the road.
With just these three projects, Canadian Natural has taken the equivalent of 2,000,000 vehicles off the road. That’s equivalent to 5% of the vehicle fleet in Canada.
And this is just what Canadian Natural has done alone. The entire industry has achieved similar, equally impressive results.
Canadian ingenuity and our ability to leverage technology has taken what was very high intensity oil – on a wells-to-combustion basis in 2009 and made it an impressive Canadian success story. It’s not 2009 any more. And this is the basis or root cause that has generated this tremendous opportunity for Canada.
And the success story is just getting started. We can, with new projects, leverage technology and Canadian ingenuity to do even better with Canadian Natural’s aspirational goal of reaching net zero emissions. Net zero emissions is a lofty goal and we plan on getting there; not by buying carbon offsets but by leveraging technology and Canadian innovation.
Canada’s energy sector has a significant and positive impact on our GHG intensity and we can make a huge impact on global emissions as well. This is the immense opportunity for Canada. For instance, if the rest of the world can achieve what Canada’s oil and gas sector has accomplished, just in terms of flaring, then GHG emissions would be reduced by 23%. That’s equivalent to taking 110 million vehicles currently on the road in Canada. Three times. Canada is obviously leading the world.
And the one LNG plant that Canada has approved when on-stream is equivalent to taking 40 coal-fired power plants off-line (or the equivalent to reducing Canada’s GHG emissions by 10%, or greater than BC’s GHG emissions). And we’ve got the capacity to build at least five of LNG plants which would be equivalent to lowering Canada’s GHG emissions by 50%. Fifty percent … that’s a big number. And this is the opportunity.
Yes, it is true as the naysayers will say, if we produce more oil and gas in Canada, Canada’s GHG emissions will go up. What is also true, but is much much more important, is that global GHG emissions will go down and they will go down significantly. In reality, not getting Canadian oil and gas onto the global market will increase global GHG emissions. Taking a global perspective is a tremendous opportunity for Canada to make a huge positive impact on global climate change. If you view these facts from a global perspective, it’s very clear that getting Canada’s oil and natural gas to global markets should be a climate change and economic priority for Canada.
It needs to be an economic priority because delivering Canada’s oil and gas to global markets generates a massive number of high-paying jobs for Canada and for Canadians. Of course, the one-time jobs to build an LNG plant, to the three pipelines proposed to get Canadian oil and gas to world markets is very high – close to 900,000 person-years of work. Even more important are the long-term jobs needed to run and develop the oil and gas required to keep those facilities operating. As [we have seen], the oil and gas sector employs roughly the same number of people as Canada’s auto sector. And putting that in perspective, these long-term jobs are equivalent to growing Canada’s auto sector by roughly 20%. If we could grow the auto sector in Canada by 20%, doing so should be a national priority, just as getting market access for Canada’s oil and gas should be as well.
Equally important are the government revenues generated from this activity, which are significant. And having a very strong Canadian economy is critical to effectively transition to a lower carbon energy supply. Transitioning to renewables does not come cheap – and it’s not free. The economy needs to be strong for that to happen. The 528,000 jobs the oil and gas industry creates are across Canada with significant jobs in Ontario and Quebec, and eastern jobs totals are actually larger than those in BC and SK. For the 23,000 oil and gas jobs our sector creates in the Maritimes – thanks to offshore development and fly-in/fly-out – make a tremendous positive impact on the economic and social fabric of that community. A strong and growing energy sector is good for Canada, all of Canada.
Canada’s oil and gas sector already has many partnerships with Indigenous companies. Canadian Natural alone did half-a-billion dollars worth of work with Indigenous companies in 2018. I know of no other industries or sectors that have such meaningful Indigenous participation. And if we unlock this opportunity, Indigenous people will be able to participate in the economic growth more so now than ever before. A strong and growing oil and gas sector is good for Indigenous people and good for Canada. Driven by the energy sector’s game-changing performance, Canada has a unique leadership opportunity to drive an improved global climate change initiative and to strengthen Canada’s economy at the same time.
Our success story has many chapters that are ready to unfold, where we can continue to leverage technology and Canadian ingenuity; driving even greater environmental performance, growing the economy, and creating thousands of jobs. At the same time, we can improve social performance and build the nation, as it becomes apparent that we can deliver impressive global climate change performance and grow the economy where ALL regions in Canada participate.
The leadership opportunity for Canada is here today. Unlocking the power of a global perspective will make a significant positive impact on global GHG emissions, it will reduce global poverty, it will embolden Canadian ingenuity, and drive both environmental and economic performance while creating thousands of jobs. Not to mention it will support investment in a lower carbon future while strengthening the nation.
Canada has an immense opportunity to become a world leader and make not only Canada, but the world a better place. And we’re just getting started. We can deliver even better environmental performance and we can create thousands of jobs, all while delivering world-leading social and governance performance.
So what I ask of you today is to take a global perspective. Climate change is a global issue, not just a national issue. Reflect upon the facts that are presented here today and then advocate; and advocate strongly, for the environment, for the oil and gas sector, for market access, for First Nations, and for Canada. Together we can create hundreds of thousands of jobs for Canadians and make the world a better place. This is a once-in-a-lifetime opportunity for Canada. Let’s not miss it.