The Leduc-Nisku EDAtorial
Leduc Blog
PWC’s Energy Visions Business Forum Highlights
May 27, 2016
business, collaboration, development, diverification, economic, energy, export, import, LNG, oil, pipelines, PWC

Customers, carbon and costs were the themes of this year’s forum. Moving away from the doom and gloom perspective of last year’s event, this year saw the presenters offer pragmatic answers to where the Canadian and Albertan energy sector is, where it’s going and how it should get there. In short, the answer to our future success lies in collaboration and working with public policy makers and all stakeholders rather than fight against them.

The China/US Question 

Unsurprisingly, the world’s two biggest economies still represent the best opportunities for Canadian Oil. The US demand for oil is increasing plain and simple. Canadian oil exports to the states have increased year over year, while exports from Latin America have begun to subside. It’s important to remember that this steady export increase has come without major new pipelines like the Keystone XL. The US Gulf Coast can produce upwards of 8 million barrels of oil per day and still represents the best market for Canadian crude oil exports.    

China’s demand for oil has and will continue to flatten. Gone are the days when spikes in Chinese demand would greatly affect the price of oil. Instead it now looks as though China’s demand increase will remain consistent for the foreseeable future as their government seeks to control consumption. Interestingly enough, China has also taken a keen interest in Canadian oilfield technology. This seems like a good thing right? But if China begins increasing domestic production, it could greatly offset their need to import oil, thereby lessening their reliance on Canadian oil exports.

Are There Viable Alternatives?

Three words: green, clean and lean. Each speaker touched on the importance of other opportunities that exist in the Canadian energy sector outside of oil. Specifically natural gas or liquefied natural gas (LNG), Solar and wind. One of the speakers - David Goldwyn, President of Goldwyn Global Strategies LLC, suggested that LNG is the way of the future and that it represents an incredible opportunity for Canada. He proposed that LNG can replace coal across Asia and has the biggest potential for change. It’s cheap, clean and Canada has a lot of it. As for wind and solar, Alberta has a bold target having 30 per cent of its power coming from renewables by 2030.

Where Do Energy Companies Go Next?

Canada is a high cost environment for oil extraction, but it is also one of the most politically stable countries in the world. Companies want to invest in Canada because they know it’s stable. In order to offset the higher costs, technology and R&D need to be a top priority. Companies need to look at research as an investment rather than an expense if we are going to remain competitive. We also need to work collaboratively with stakeholders and special interest groups.

A great example of this came again from David Goldwyn when he explained how the US government worked past their oil export ban. As the US is now producing more oil than it can consume they saw an opportunity to begin exporting once again. Environmentalists were naturally up in arms over the idea as this would counteract the country’s emission reduction goal. The government decided to work with them rather than fight against them and a compromise was struck. Renewables were offered a tax incentive so that the Americans could meet their green energy target and the export ban was lifted. The way forward for both the renewable sector and oil/gas sector is through collaboration, transparency and trust. In the case of pipelines, instead of explaining how the benefits clearly outweigh the risks, focus on the benefits and how you will mitigate the risks. In a world where carbon emissions are on everyone’s mind, being innovative, collaborative and open to new opportunities is the real advantage for Canadian energy.