What do OPEC, potash companies, and modern prairie farmers have in common? By process of elimination, it’s not the attire: flowing white form-fitting mumus vs. business suits vs. John Deere hats/worn plaid/missing fingers. It’s not beverages; sliced-fruit-flavoured water vs. red wine vs. Pilsner beer consumed in five-gallon quantities or five gallon pails, depending on the formality of the event (the former appropriate for weddings, the latter for everyday socializing).
No, what these geographically diverse institutions have in common is that they have all refused to simply be commodity price takers. At various points, each has attempted to do something to try to improve the wretched and ancient existence of hauling product to market and hoping for a decent price. Trying to break the price-taker cycle doesn’t always work, but they’ve all tried, in different ways.
It’s not easy to change the price-taker mindset. Switching to something else involves major shifts in selling techniques or value-addition. On the other hand, nothing in the petroleum sector is easy these days.
It’s not easy getting out of bed these days either, when to see the news is to see an infinite number of articles about how the life-giving fuel we provide – that keeps everyone alive – is now public enemy number one. We can’t do much about such media tidal waves when the world has been hypnotized by the shrieking Sesame Street warriors that activists are using as shields/Trojan horses. That battle is not worth waging any longer; it’s a global TKO for the kid in pigtails and her amoral handlers. That doesn’t mean the war is over; when some of the bastards start freezing to death, they’ll shut up and come around. But until then we need to refocus, to channel our energy towards things in our control.
That means maybe looking at the world in different ways. Not all of them will make economic sense, but we need to start looking at them without filters, with new eyes, and looking beyond the dumb solutions being adopted due to some weird global peer pressure. Building infinite solar farms that create power gluts at the wrong times of day doesn’t help the world a whole lot, yet we’re charging off in that direction like a herd of buffalo. Since the bar is set as low as it can go, we should be able to come up with something better.
With respect to achieving adequate market access, it is increasingly unlikely that Canada’s petroleum resources will ever be allowed to reach international markets freely as every other nation’s do. The situation is outrageous, but we need to think of that factor like we do winter: it’s here, it sucks, and we have to deal with it. What are the alternatives? There are brilliant ideas out there including new ways to move bitumen by rail car, which helps one sector, but…what if we think outside the box, trying to imagine more than just different ways to move the stuff?
Well, we could do what OPEC and potash producers do, and form a cartel. That, in effect, was what the Alberta government did when it curtailed oil shipments – producers worked in concert to reduce supplies to align with exit realities. Producers didn’t all do this voluntarily, but the end result was the same. However, this isn’t really a great long term solution, because we can’t impact global prices like global cartels can – we can boost prices within our region, but only up to what the next price setting point achieves. So this is probably not the best alternative. Plus, in a freely moving product market, it runs against the grain to constrain it even more artificially than is done now.
So maybe we need to try what the farmers are doing. Not drink pails of Pilsner, but expand the search for value added opportunities. Consider ideas like what Proton Technologies is pursuing. The company is taking the old idea of fire-flooding, more or less, but instead of using the technique to enhance oil recovery, they’re focusing on the hydrogen created by the process (and waste heat, which can have other uses like generating electricity). Hydrogen, I can hear you say; what the hell are we supposed to do with that?
That’s the question that buttoned down minds come up with. It’s easy to find naysayers against unconventional ideas for any number of reasons. Fire-floods can wreck the reservoir, and remaining oil may never be recovered. Hydrogen is difficult to handle and blows up. Pipes that can carry hydrogen are more expensive than natural gas ones. There are limited markets for hydrogen. It all sounds like a lot of work.
All these are true, and make the prospect of developing a new industry seem extremely hard. You know what else is hard?
Building a pipeline is hard (if not impossible). Convincing the world that they can’t live without hydrocarbons is hard (if not impossible). Getting the federal government to treat resource development in the country more seriously than climate change is hard (if not impossible).
And it’s true, there is as yet no hydrogen economy, and it will be hard to build one. Guess what? We’re getting an electric vehicle economy shoved down our throats, and no one wants one, and it will be impossible to convert enough Canadians to EVs to do anything at all about climate change anyway – and that impossible and impossibly dumb plan is being foisted on the western world regardless of the fact that it is almost laughably implausible. So whatever is coming next is going to be hard to build.
And we don’t even need a full hydrogen economy – the current demands for hydrogen are huge already. The refining process uses an incredible amount. So does the manufacture of fertilizer. The demand from these industries alone could help get this nascent industry off the ground.
Now let’s take it a step further, a step away from the current furious paralysis that is sweeping Canada’s petroleum industry. Why not switch to offense? Why shouldn’t Alberta jump at the chance to become a world leader in a hydrogen economy? Why don’t we woo Honda and Toyota to the province, two companies that currently market hydrogen-fuel-cell vehicles along the west coast of North America, and help them build a critical mass ahead of anyone else, before we are forced to drive EVs around by the demented likes of Catherine McKenna and Gerald Butts?
And while we’re at it we might just be able to turn hundreds of spent oil pools, ones that are now a massive abandonment liability problem into an asset, into a huge network of hydrogen generating stations.
Consider the situation from another angle. Huge solar and wind farms are being constructed within spitting distance (for good spitters) of natural gas fields that are being shut in and literally abandoned. Trident Exploration earlier this year walked away from 450 billion cubic feet of proven natural gas reserves because costs were too high and revenue was too low as a result of the inability of producers to get to markets. The province could be generating vast amounts of electricity by burning that gas, in a more environmentally friendly manner than solar. The process could be made completely emissions free by reinjecting the exhaust gases underground, creating an emissions-free, long-life power supply, all within the existing footprint of natural gas fields. In other words, we could be using this fully-plumbed resource to generate power around the clock, as opposed to creating from scratch renewable energy projects with huge environmental footprints that only generate power for part of the day and for part of the year. We are wiping out farmland or natural habitat to build giant solar farms that will provide power not 24/7 but 4/7 (and in winter not anything). We are wasting hundreds of acres (or more) to construct semi-useful wind energy instead of making full use of infrastructure we have already constructed. And, if the hydrogen scheme works, we could have hydrogen production interspersed with all this electricity.
The pipeline wars and general global petro-antagonism have caused us to fall into a scarcity mindset – we see lack of market access being the main delimiter to success. There is some truth to that, when one remains in that headspace. But like the seven stages of grief, we need to move on to the next one.
That would be the abundance mindset. Stop focusing on the limitations that climate goons are placing on us, and concentrate on the unlimited possibilities. The world is built on cheap energy. Western Canada is blessed with staggering quantities of the stuff. The world is going to need what western Canada has for the coming decades a lot more than they’re going to need renewable energy snake oil salesmen and their child-warriors. Let’s see what else we can do with our products and our resources, rather than dump them in pipes and see what sort of cheque rolls in on the 25th.
Energy literacy is more critical than ever. Luckily, help is available! Pick up a copy of “The End of Fossil Fuel Insanity” at Amazon.ca, Amazon.com, or Indigo online. These Amazon reviews may be the wisest material you’ll find on the internet (except that one loser).
Read more insightful analysis from Terry Etam here. or email Terry here.