When President Joe Biden was elected in November, it raised concerns north of the border, notably in the oil and gas sector.
As neighbours and trade partners, the U.S. is Canada’s biggest customer when it comes to oil and gas services and products. Part of Biden’s platform was the cancellation of Keystone XL, and a $2 trillion climate plan., the latter significantly impacting both Canada and Alberta, who invested billions.
These two stances show an eye on moving from oil and gas and combatting climate change, even though in the coming decades their services will be still be required, and the U.S. is the world’s biggest buyer.
This raises concerns for Canada, who is actively seeking other trade and business partners to buy their product. While Canada is the world’s fourth-largest oil producer, and third in the world for proven reserves, it struggles with getting its oil to other countries, while spending billions to import oil.
It would be in Canada’s best interest to find other business partners and larger markets quickly. A diversification of product is vital for the sector and country’s GDP. With world outlook slated to increase as the world navigates out of COVID-19, Canada could find itself in an advantageous situation.
Although Canada has other customers for their oil and gas, a broader customer base provides insurance should the U.S. and Biden take further steps in their climate plan.
Projects such as the Trans Mountain pipeline are of utmost importance to economic recovery and growth, increased market visibility, job creation, and safety, while in-house projects such as Energy East should be on the forefront.
Trans Mountain could give Canada more overseas opportunities with a hub on the west coast, and benefit the country. Tapping into the Asian market would be monumental.
While these are important projects for the country, the pipeline vs. rail debate is another issue at hand, both for the environment, safety, and cost. In November, Canadian crude-by-rail exports surged 87% to 170,000 barrels per day, with the Canada Energy Regulator stating oil shipments of 173,000 barrels per day.
Rail transportation is also considered more expensive than shipping by pipeline, yet works in a pinch when left with no other choice.
Even in the face of climate change and an eye on the future, oil will be refined and extracted for decades to come. During this time, it’s imperative that this oil makes it to people safely and cost-effectively. Pipelines are also considered more environmentally friendly, especially as the industry has innovated and transformed operations over the years.
While both methods come with their concerns (from spills to derailments), the safer and more economically viable option is pipelines. Now there just needs to be a solution that pleases all and gets Canada’s product to bigger markets and diversifying its customer base.