As a long time attendee of the Global Energy Show (GES) dating back to the days when it was called the Global Petroleum Show, I was particularly interested in what the strategic conference had to offer this year.
In 2023, the realities for the global energy industry in general, and for the Canadian energy industry in particular, are daunting. We are sixteen months deep into the reality of the Russian invasion of Ukraine and its interruption to the flow of oil, natural gas and refined products, creating one of the largest shifts in the global energy market in decades, which some veteran journalists say is permanent.
As Fareed Zakaria pointed out in his June 18th show, Global Public Square,
“Despite what many hope for, the world continues to be heavily dependent on fossil fuels. The Ukraine war and sanctions against Russia have reduced Moscow’s importance in global oil and gas markets. In addition, two of the world’s other major oil producing countries, Iran and Venezuela are also under sanctions and have decaying oil infrastructure. America produces lots of oil and gas but still imports large quantities. As a result, the world is now reliant on a handful of countries in the Persian Gulf as steady and reliable suppliers of oil and gas. These conditions will likely continue over the next decade and if they do, the Gulf will see one of the largest inflows of wealth in history. The economic consequences of this wealth are all around us.”
Zakaria echoes a Bloomberg report from earlier this month stating that the Abu Dhabi Investment Authority, the Kuwait Investment Authority, the Saudi Public Investment Fund and the Qatar Investment Authority manage almost $3 trillion in assets, up 42% in the past two years, concluding that “For the foreseeable future, these will be the most significant pools of capital on the planet.”
“It’s important to recognize these companies and individuals who are committed to decarbonizing technologies and sustainable oil and gas in the evolving energy landscape” said Nick Samain, Senior Vice President of dmg events, producer of the Global Energy Show.
So how does Canada compete?
From the first fireside chat to Alberta Premier Danielle Smith’s insightful speech and the fireside chat with Saskatchewan Premier Scott Moe, the GES strategic conference did not disappoint. The availability of capital was a strong concern at the conference as was discussion of the Inflation Reduction Act’s size and scope- $369bn in grants, loans and tax breaks – luring Canada’s capacity for new energy projects south.
As a featured first day speaker, Premier Smith emphasized Alberta’s energy advantage and her work to lay the ground work for Alberta to stay out in front on energy production and remain at the forefront of energy innovation, research and development. She pointed out that output from Alberta’s existing extraction facilities can be sustained for up to one hundred years or longer with technological advances. The province has the ability to attract buyers and investors who are looking for oil and gas produced in environmentally sustainable ways. Smith recognized that the issue of market access still exists and advised there is ongoing work to partner with other governments, regulators and industries to streamline approvals and get infrastructure built. However, she did point out Federal government roadblocks saying…
“It would be nice if Ottawa would recognize the value of Alberta’s natural gas and what it provides not only to our province but also to our country and to the global economy and how important natural gas is to every province in Canada. Currently as things stand the federal government has been more interested in slowing down infrastructure projects by moving the regulatory goalposts…there is still some Federal government obstructionism to overcome.”
Just a day before the GES, while speaking at the National Coalition of Chiefs Energy and Natural Resource Summit, Smith identified two anti-growth policies coming from the Federal government as particularly troublesome.
“One is an emission cap, for which they have proposed a 42% reduction on oil and natural gas by 2030, which we all know is unachievable,” Smith said. “An emissions cap that could be implemented on such a fast timeframe, without the technology available, is essentially a production cap. They also want to achieve a net zero power grid by 2035. In a market like ours, where 90% of our power is generated by natural gas, that it is also equally unachievable, without enormous cost to our ratepayers.”
Saskatchewan premier Scott Moe also addressed the Canadian energy advantage pointing out that countries will source oil and gas from somewhere in the world and with Canadian sustainable and ethical industry practices and clean electricity standards, Canadian energy is the best choice.
“We need to celebrate not only what we produce but how we produce it.” Moe said. He pointed out that the Federal government is treating some provinces differently in terms of the Carbon tax, a fundamental unfairness that the Canadian Taxpayers Federation has also been highlighting – that taxpayers in other provinces pay a higher carbon tax than in Quebec. Moe supports lowering the price to the floor price that Quebec pays, and pointed out the Clean Fuel Standard is not equal across the nation as well.
Some of the most frank and unabashed honesty came from Stephen Buffalo, President and CEO of the Indian Resource Council and Dale Swampy CEO of the National Coalition of Chiefs in the panel discussion of Indigenous ownership of energy projects, titled “Breaking Down Economic Development Barriers.” Their identification of the history of key economic development barriers that Indigenous communities face when it comes to energy projects was profound. They identified the need for financing as one of the biggest barriers.
“Now we have so many opportunities and there’s so much willingness by the industry to have us as partners, but we can’t get access to decent financing and that’s what we need,” Dale Swampy said. “Only the big bands like my band, the Sampson Cree Nation or the Fort McKay First Nation have the ability to be able to get good financing. But the smaller, ‘have not’ bands get very high interest rate loans which doesn’t make any sense. It’s a recipe for disaster. We want the federal government to (provide financing) but they are against any development in the natural resource industry.”
“It’s now more about ownership.”
While access to funding historically has been a challenge, there has been positive development that creates more access to capital. In addition to his work at the Indian Resource Council, Stephen Buffalo has sat on the board of the Alberta Indigenous Opportunities Corporation (AIOC), a crown corporation that has helped create more capacity for indigenous communities to attain ownership.
“We’re trying to fight poverty and we’re seeing billions of dollars made in our traditional territories. We didn’t ask to be put on box of land and see all the development happening in our backyard,” Stephen Buffalo said.
“Access to capital has always been a struggle for First Nations so when you see this activity happening how do you get a part of it? We always try to be nonpartisan but the government in Alberta at that time was very positive and proactive. The premier of the day (Jason Kenney) created the AIOC, and we’re seeing a lot of proposals come in as part of the infrastructure ownership or equity ownership which is really changing the game. We’re no longer passive royalty recipients or getting contracts to do certain jobs/ labor jobs. It’s more about ownership because you’re at the table to make decisions. One of the biggest things is environmental concerns. We care about the planet, and we want to protect the water and the land and everything it has.”
But both Swampy and Buffalo also described the complex fight of poverty and its related social pathologies and offered key insights into the failures of the Federal systems limiting growth. Both speakers applauded success of the AIOC, which announced the largest Indigenous energy partnership in North America- with twenty-three Indigenous & Métis Nations purchasing interest in seven major Enbridge pipelines in Northern Alberta in September 2022. It is a $1bn fund with $31mn spread out over twenty seven communities participating in projects as owners.
Stephen Buffalo did not mince words about the failures of the Federal system managing Indigenous affairs and criticized a system that left Indigenous nations out of development plans in their territories. He pointed out that the Federal government still tries to direct the activities of Indigenous peoples and he applauds industry groups such as the Canadian Energy Executive Association (CEEA) for reaching out, opening the door and bridging the gap for First Nations to become part of industry.
“As long as there are resources to develop -from oil and gas to critical minerals- as long as First Nations are part of ownership, Canada will move positively to a greener space. Conferences like this (the Global Energy Show) and having these discussions are very positive.”
Colin Gruending, Executive VP and President of Liquids Pipelines Enbridge echoed Stephen Buffalo’s words and praised the AIOC saying…
“I think the AIOC is a shining example of innovation and inclusion spawned within Alberta… frankly every province and the federal government should have a massive one (like it).”
So maybe with increased Indigenous ownership and multiple layers of government collaboration, there is a chance that Canada can compete after all.
Many thanks to Nick Samain, Senior Vice President of dmg events, producer of the Global Energy Show for assembling a great group of speakers, panels, and discussions.
Maureen McCall is an energy professional who writes on issues affecting the energy industry.