Wednesday, January 20, 2021Canada's Leading Online Business Magazine

Natural Resources Minister Joe Oliver

Natural Resources Minister Joe Oliver Discusses... The State of Canada’s Oil & Gas Industry, Oil Sands, Regulatory Change and Asia

As a country bestowed with the third-largest oil reserves on the planet, Canada is fast becoming a far more dominant force on the international stage thanks to advancements in various technologies, a stable national infrastructure and the ever-increasing energy requirements in need of fulfillment around the globe.
During an interview with the Minister of Natural Resources Joe Oliver he told CBJ about the federal government’s principal objectives for Canada’s energy future. Diversification: It’s a word that has become synonymous with any talk of growth throughout the industry.

“Canada’s oil reserves are the most strategic of our energy assets, in particular the oil sands, which represent 170 of our 174 billion barrel proven reserves,” Oliver notes. “Diversifying our markets and developing the necessary infrastructure to transport our resources is a key to helping ensure the financial security of Canadians and their families for decades to come.”

The Minister also touched on Canada’s regulatory system and acknowledged the importance of developing energy resources in as timely a manner as possible as well as responsibly and sustainably.

Oliver was extremely pleased that Finance Minister Jim Flaherty’s March 29 budget addressed this very issue. No longer will environmental assessments of energy projects be allowed to drag on for years with no real end in sight. As of now, such projects must be accepted or rejected within a two-year period. The most publicized project that has encountered numerous tie-ups has been the Northern Gateway project. It too must be resolved within a two-year period, as Flaherty made the new law retroactive to those potential projects still in limbo.

“Providing a regulatory regime that is both economically efficient and environmentally effective is a basic part of offering a stable, predictable climate for investment,” Oliver states. “This is why regulatory improvement has been a priority for our government from the beginning. Our goal is simple: one project, one review, in a clearly defined time period.”

Oil Sands Controversy

Oliver has often stood firm on the point about Canada’s position on the fuel quality directive and the need to ensure it is non-discriminatory and based on sound science. On the topic of lowering greenhouse gas emissions, the minister confirms the federal government does not object to the goal of the controversial fuel quality directive, but does object to any discriminatory treatment that singles out oil sands derived fuels without sound scientific justification.
Minister Oliver pointed to a recent report by acclaimed climate scientist Dr. Andrew Weaver of the University of Victoria on the impact of the oil sands on global climate. Weaver’s resume includes having been the lead author on reports issued by the United Nations panel on climate change.

According to Dr. Weaver, if every drop of the current oil sands reserves of 170 billion barrels were produced at today’s rate of production – which would take more than 300 years – total effect would be an increase in global temperature of only .03 degrees Celsius or 3/100 of a degree. Against that minute figure, there’s an astounding $3.3 trillion in economic enhancement, an average of 700,000 jobs annually over the next 25 years and billions to fund important social programs that would result from the development of the oil sands.

“Any policies that discriminate against oil sands will impede the free flow of global oil supplies and are detrimental to overall energy security,” declares Oliver.
It’s the federal government’s belief that implementation of the draft European fuel quality directive could have significant and unintended consequences to the world’s oil supply due to the extent it introduces discriminatory and non-scientific impediments to global energy markets. Oliver reinforced this message during bilateral meetings with EU ministers and the European Energy Commission – Germany, France United Kingdom, Poland and Belgium.

“Our government does not object to the goal of the fuel quality directive to reduce greenhouse gas emissions but we continue to object to any discriminatory treatment that singles out oil sands derived fuels without sound scientific justification and are pleased to see many European Union countries are also opposed to this type of discriminatory measure.”

Oliver also pointed to independent studies that have shown the life cycle greenhouse gas emissions of oil sands crude are similar to, and in some cases lower than several crude oils currently imported and used daily in Europe.

“Canadians have always taken great pride in the blessings of our natural resources and our government is determined to make the most of them,” Oliver says. “We will advance Canada’s position on unconventional oil and gas development, a transparent and efficient regulatory system. Investment in Canada is supported by our sophisticated financial and legal institutions, by extensive science and technology and broad experience in geosciences.”

From a government perspective, there now stands a tremendous opportunity for Canada to diversify its energy markets and improve the energy infrastructure to leverage such advancement. Another key objective is to establish more reasonable and predictable timelines to review major resource projects while addressing environmental concerns.

Clean Technologies

Advancements in clean technological projects remain a top-level commitment, high on the agenda. Oliver joined Vicky Sharpe, President and CEO, Sustainable Development Technology Canada where they jointly announced $22 million would be invested through the SDTech Fund to drive eight new clean technology projects.

The projects demonstrate our leadership in driving clean technology innovation to help create viable new industries for Canada’s economy,” Oliver says.
The minister also recently announced the Harper government will introduce new fuel consumption labels in 2014 to help consumers make informed decisions when purchasing new vehicles sold in Canada.

“When Canadians make large purchases they want the best information available,” says Oliver. “Our government has listened and our new labels will more accurately reflect the actual fuel efficiency of vehicles.”

Oliver also notes how important the oil and gas sector has been to Newfoundland & Labrador.

“It is not an exaggeration to say that the oil and gas industry has transformed the economy of several provinces,” Oliver declares. “Together with new mining developments, the Newfoundland and Labrador oil and gas industry is leading a resurgence of the natural resource sectors.”

“Led by the resource sectors, the value of the province’s merchandise exports increased by nearly 40 per cent last year, well ahead of any other province,” he continues. “Those numbers translate into real, tangible benefits for people — more and better jobs; tax cuts for families at all income levels; lower taxes for small businesses; and new investments in services and infrastructure that play such an important part in building stronger communities and attracting new investment.”

Canada is further moving along its initiative to advance clean energy technologies and reduce greenhouse gas emissions with an investment of $14 million in Aquistore, a carbon capture and storage demonstration project near Estevan, Saskatchewan. The Government of Canada is contributing $9 million through its ecoENERGY Technology Initiative and $5 million through Sustainable Development Technology Canada (SDTC) to the Aquistore Project. 

“The Aquistore Project represents a first in the world: the first-time carbon dioxide is sequestered safely at this scale in the ground from a coal-burning plant,” SDTC President and CEO Vicky Sharpe says. “It is clean tech innovation like this that will help drive the Canadian economy, creating jobs and economic growth, and a source of innovative solutions.”

The Petroleum Technology Research Centre (PTRC) is managing the Aquistore project with input from various private sector resources. The Saskatchewan Ministry of Environment is also investing $5 million through its Go Green Fund.

Inefficient Regulatory System

The importance of aggressively pursuing regulatory reform in order to ensure future economic prosperity and energy security is a topic that can’t be overstated.
“Regulatory modernization is a key priority for our government,” Oliver decrees. “We need a regulatory system that works and provides a competitive advantage for Canada.”

Oliver also meets regularly with representatives from key organizational bodies such as the Canadian Association of Petroleum Producers (CAPP) and the Canadian Energy Pipeline Association (CEPA) to discuss how these pertinent issues are affecting Canada’s oil and gas industry. The economic importance of our natural resources and the need for smarter regulation for major energy projects cannot be repeated often enough. Many such elaborate projects are bogged down in a litany of bureaucratic and regulatory red tape, mainly due to inefficiencies such as duplication of procedural process.

“Major projects in Canada are subject to long and potentially endless delays because of a needlessly complex and duplicative regulatory system,” he says. “This is costing Canadians good, well-paying jobs. That’s why our government wants to streamline the regulatory system for major projects across Canada.”
“The government is focused on responsible development of Canada’s natural resources to create jobs and economic growth as well as future prosperity,” Oliver continues. “We’ve taken great strides toward making our complex regulatory system more efficient, and we remain focused on our goal: one project, one review, in a clearly defined time period.”

Pipeline Development

In order to get oil to markets such as Asia, the necessary infrastructure of the Northern Gateway runs through First Nations’ territory. How do we ensure these things don’t get tied up in the courts for years?

“We have both a moral and constitutional obligation to consult with Aboriginal communities in respect to these projects,” Oliver responds. “Whatever timelines are imposed will provide adequate time for us to discharge that constitutional responsibility. We have to make sure it’s a fulsome one and is respectful of the Aboriginal communities’ desire to be heard as equals.” Further pressing that point on the continuing dispute, Oliver was asked whether in the view of the government the Aboriginal groups have any type of veto power over such energy projects of national interest.

“The law is that they don’t have a veto, but they certainly are entitled to be consulted and accommodated,” he asserts. The degree to which accommodation would be provided remains unclear and would more than likely be determined on a case by case situation.

Investment in two-way trade opportunities is another area Oliver says the government continues to explore along with such other major oil producing nations as Saudi Arabia, United Arab Emirates, Algeria and Kuwait. Oliver also notes that the need to do increased business with Asia will be essential.

“Our Asia-Pacific gateway will be the fastest way to ship goods including energy between North America and Asia and diversifying our export markets remains a key strategic objective for Canada,” Oliver states. “We’re also moving forward on reasonable and predictable timelines to review major resource projects while addressing legitimate environmental concerns.”

As for projects closer to home, the shelving of the Keystone XL pipeline project is one that has drawn a lot of headlines. Is it a delay or a rejection?
“We view it as a delay,” Oliver declares. “The fundamental reasons making Keystone a very positive project for the United States is that it addresses three issues for them: national security, jobs and economic growth.”

In addition, there have been some fairly significant signals that were positive. President Obama emphasized to Prime Minister Harper that the rejection was not based on the merits of the proposal. In other words, it’s nothing but politics.

“I thought it was interesting that former President Bill Clinton, whose wife makes the decision – at least preliminarily – has spoken out in favour of it,” Oliver muses. Obama has also stated he was happy that half of the Keystone Pipeline that doesn’t require presidential approval will be built. Those are strong signals that full approval down the road is almost a 100 per cent certainty.

International Energy Forum

Energy ministers from producing and consuming countries and CEOs from major international petroleum countries discussed energy security and global oil and natural gas markets at the International Energy Forum, held every two years. It’s the world’s largest gathering of energy ministers with 88 member countries representing more than 90 per cent of global oil and gas demand. Such countries include: China, India, Mexico, Russia and many European nations.

The gathering in Kuwait City marked the first IEF meeting attended by a Canadian minister, taking a seat at the table with the other major oil and gas producers. Last year Canada signed onto the new IEF Charter and is a member of the executive board.

Many nations are also members of the International Energy Agency (IEA) and the Organization of Petroleum Exporting Countries (OPEC). Day One of the two-day conference focused on planning and investing to meet future energy demands. Minister Oliver made a point of accentuating Canada’s important contribution of oil, natural gas and uranium to global energy security and also outlined our position on the European fuel quality directive. 

“We discussed the development of various energy sources to achieve a more sustainable energy mix, including non-conventional energy while at the same time meeting energy investment requirements,” Oliver says. “I emphasized the contribution of Canadian oil and gas to global energy security.”

Bilateral meetings Oliver held with several ministers, including those from the United Arab Emirates, Algeria and Saudi Arabia, enabled him to reinforce Canada’s important role as a stable, competitive and reliable energy supplier to the world in an often volatile market as well as the potential to grow energy production.

Global Diversification

Investment in Canada is supported by our sophisticated financial services, our regulatory system, legal institutions, extensive science and technology networks, and broad experience in geosciences, making this country extremely attractive for other nations to want to do business with. Canada’s competitive, stable and reliable infrastructure makes it an ideal energy partner to the world, with a capacity to increase production.

“We have to recognize that the global economic balance is shifting, and it’s essential that we adapt to these changes,” Oliver declares. “As attractive as this country is to investors, we can do better. Our government is committed to ensuring that Canada can attract the investment it needs to develop its natural resources and build the infrastructure we need to move our resources to these new markets.”

Few would argue that Canada has not been transparent in its science and disclosing information about oil sands emissions. But other countries with whom Europe actually imports oil have not released this type of information to anywhere near the same degree. The assumption therefore is that these countries emissions are roughly equivalent to conventional light oil – something the Canadian government takes umbrage with.

“I was in China when we heard President Obama had rejected the Keystone XL pipeline, so we were already thinking about the objective of diversifying our markets,” Oliver reveals. “The delay in the Keystone approval emphasized the need to go ahead and do that, so it’s a key priority. It always makes sense to have more than one customer.”

This is what makes the burgeoning Asian market so attractive and potentially lucrative, with demand at a peak in that part of the world. China is by far the biggest consumer of energy and it’s been forecasted it may require as much as 25 per cent of the entire global energy demand within the next 25 years. The Indian middle class is also growing at a rapid rate and South Korea is an important economy as well.

In recent months there has been increased talk of developing a free trade agreement with China, but it appears that is not a top priority for Canada at the moment.

“I wouldn’t characterize it as a near-term objective,” Oliver confirms. “It’s something that was discussed in a very general way when the Prime Minister visited China, but it’s certainly not an imminent decision.”