Calgary, Edmonton, Saskatoon, Sudbury – Saskatchewan and Alberta’s respective energy ministers took federal Parliamentary Secretary for Natural Resources Paul Lefebvre to task on some of policies implemented by the federal government, and particularly the lack of an oil pipeline to the East Coast.
Saskatchewan Energy and Resources Minister Bronwyn Eyre, Alberta Energy Minister Sonja Savage and Lefebvre participated in a panel hosted by Canadian Association of Oilwell Drilling Contractors (CAODC) president and CEO Mark Scholz on Nov. 18. The conversation was part of the CAODC’s annual “State of the Industry.” Usually presented in person in Calgary, due to COVID-19, this year’s version was held via Zoom, with Scholz in Calgary, Savage in Edmonton, Eyre in Saskatoon, and Lefebvre in Sudbury.
Lefebvre had noted in his initial comments that Natural Resources Minster Seamus O’Regan had previously said Canada won’t reach its climate targets without oil and gas. Lefebvre said, “We can't get there without the innovation and the intrapreneurship of your industry, without the operational and environmental excellence of the drilling sector, to lower industries’ emissions.”
“The message to them and to you was that the energy sector has to embrace zero, there's two sides of the same coin. Because the danger of our energy industry, for our energy industry is that portfolio managers and Zurich and London and New York are sitting around boardroom tables deciding where to invest, they're looking for commitment to net zero, becoming a must. So net zero isn't just a plan for a climate. It's a plan for economic competitiveness. And I can't emphasize that enough.
“We have to skate to where the puck is going. That's our challenge. But it's also a great opportunity.”
He noted having spoken in the past to U.S. congressional representatives and senators about the importance of the Keystone XL pipeline.
Scholz said, “I think in Western Canada, and quite frankly, all of Canada, I would hope, would see resurrection of an Energy East concept as being putting the puck right into the net.”
He pointed out an oil tanker had recently taken an oil cargo from Burnaby, B.C., down the Pacific coast, through the Panama Canal, and up the Atlantic coast to Saint John, New Brunswick.
Lefebvre said, “Certainly, the Panama Canal route is pretty unconventional.”
He said TransCanada (Now TC Energy) “made a business decision of not moving forward with that (Energy East.)”
He said, “Given the fact that we need to make sure that the regulations and the, you know, again, those goalposts don't change. And I know, we were changing them in the process, right, with the Impact Assessment Act. And that's what we proposed in 2019. So now, the businesses, what they want is certainty. They want to know where the goalposts are. Don't moving them on them. At the time, again, we were proposing to that these to be changed, and I get that. But now, they know where the regulations are. You know what, if there is a if there is a business case to be made.
“And obviously, as you've just stated it, it sounds as if there is. Certainly somebody will step forward and propose this project. And it will go through the regulatory process.
“Canadians need to have confidence in this regulatory process. And that's why we actually did the rules that we put in. And so, now, again, it’s up to business to look at the lay of the land. And it’s not an easy pipeline to build, right?”
He noted there are “different political views on this.”
Savage said, “It's ridiculous to consider moving our oil all the way down through the U.S. Gulf Coast, and then all the way back up the East Coast to refineries on the East Coast. And there's even talk of proposals to move it to the west coast, in the Trans Mountain system, and then down the West Coast and the Panama Canal all the way up to the East Coast. And it's unfortunate that energy East didn't proceed, because that was truly a nation building (project).”
She said in 2017 TransCanada told the National Energy Board, now the Canada Energy Regulator, “They could not be held accountable for upstream and downstream GHG emissions in a pipeline project application, that those broader policy public policy issues were too much for a pipeline proponent to get through a vigorous regulatory process.”
“I would love nothing more than to see another Energy East pipeline proposal, or a West Coast pipeline proposal; frankly, any proposal, gas or oil. But I just it's going to be very, very challenging for companies to have the certainty and to get through the onerous rules under Bill C 69, and the uncertainty and the climate change tests. We all know we need to do more to reduce emissions, but in project reviews, and regulatory project reviews, it's too onerous for companies. So, I would love to work with the federal government to get a pipeline to the East Coast or West Coast through. Our country needs it. It's going to be very, very challenging has to have another proponent propose something like that,” Savage said.
With regards to “this idea of cutting through politics,” Eyre said, “the problem is that there has been a lot of politics to these discussions. And I think just being completely frank and honest.”
“If we look at the environmental Impact Assessment Act, a.k.a. Bill C-69, it has hardly proven itself, when it comes to this streamlining reputation that is being heralded and held out. It is supposed to be that, but there is, in fact, much uncertainty built in. And I think that is very much to be determined, in terms of the certainty that is supposed to represent.”
Eyre added, “The clean fuel standard is an economic lead weight, and it will be, in effect, an additional carbon tax.”
She wished it was talked about more, and urged the CAODC and other stakeholders to raise as much awareness as possible about it.
What is industry not getting right?
Scholz asked them what the industry is not getting right? Lefebvre gave the example of Indigenous issues, saying, “The jurisprudence has evolved on that greatly. And so, if we just choose to keep ignoring that, it's really tough to be able to move forward because it could be challenged.”
That occurred with the Trans Mountain Expansion Project, he noted, saying, “I'm hoping that industry is looking at and learning those lessons of what we're hearing from the courts and say, ‘Okay, well, how do we just not keeping ignoring this?’”
Savage said a decade ago, industry and government were caught off-guard, with the last project to go through relatively smoothly being Enbridge’s 2009 Alberta Clipper. (Until 2015, Savage worked for nine years for Enbridge in the area of government affairs and public policy, including working on Alberta Clipper.)
She spoke of subsequent “huge, well-funded environmental opposition.”
“They didn't see it coming in, and they weren't prepared for it,” Savage said. “They also weren't prepared to bring Indigenous people to the table as partners, the way they are now. And we do see some elements of industry maybe not being prepared or being caught off a bit off guard on some of the ESG (environmental, social, governance) requirements.
“We're seeing banks retreating from the gas sector. And I'm not sure that industry saw that company coming as quickly, either,” Savage said.
She added the industry is taking enormous steps to reduce emissions, and bring Indigenous people into their business plans.
Eyre warned about “being on guard about being desperate to please.”
She spoke of remaining proud in the messaging, noting that if the rest of the world extracted oil and gas the way Canada does, global greenhouse gas emissions would fall by one quarter.
“Let's be completely honest. If someone wants to tell good news about the oil and gas sector, it's very hard to get the media interest,” Eyre said.
She noted carbon capture and storage (CCS) is “oddly off the federal radar,” and suggested it was because of the enhanced oil recovery aspect of it. If Canada adopted the American “45Q” system, that would change the narrative around CCS.
Eyre concluded, “If a part of it's just not really liking the oil, then that's right back to where we started, about are we being political? Or are we being environmental? Or what are we being? But I think we should be honest.”
Brian Zinchuk, Local Journalism Initiative reporter, Estevan Mercury