With some of the world’s largest proven reserves of oil and gas, Canada has seen a dramatic increase in energy-sector investment over the past decade, and energy companies are now looking to capitalize on that by widening their export market.
“Opportunities lie in diversification of energy export and end use,” says Jason Langrish, president of the Energy Roundtable. “This means developing export infrastructure for oil and gas to East Asia, continental North America and possibly Europe. There may be further opportunities to refine crude oil in Canada for the domestic and export markets, and to use natural gas in power generation and transportation.”
However, efforts to leverage the country’s energy advantage and develop new markets for export are facing opposition domestically and abroad.
The sector is well aware of the challenges, which include overcoming the perception that oil sands crude, in particular, is environmentally damaging, Mr. Langrish says. “To a lesser extent, the same can be said for shale gas production.”
He says that other challenges are:
• Developing pipelines for export, notably to the West Coast;
• The high cost and long timelines for building out energy infrastructure; and
• The lack of clarity on foreign investment rules in the energy sector, notably those involving state-owned energy companies from Asia and the Middle East.
These issues will be the focus of energy industry leaders when they meet in Calgary on October 2 for the ninth annual Calgary Energy Roundtable. They will also discuss efforts to define Canada’s place in the global energy mix, and the commercial opportunities this represents.
Mr. Langrish says those opportunities include the export of liquefied natural gas (LNG) off the West Coast from Kitimat in northern British Columbia, an oil pipeline and export from the West Coast, oil export to the U.S., the openness of Canada’s energy sector to foreign investment and Canadians using funds generated in the energy sector to invest abroad.
One of the presenters at the Energy Roundtable, Reynold Tetzlaff, national energy leader for PwC Canada, says Canada’s oil and gas reserves are among the world’s largest and most strategically important.
“Our country’s success at attracting global capital, combined with game-changing technological advances, has led to the development of these resources at a speed and on a scale not thought possible even five years ago,” he notes. “The reasons global investors are investing in the Canadian oil sands range from low geological, geopolitical and exploratory risk and a strong reputation for contract transparency, to our world-class oil and gas technology.”
The recent increase in Canadian production can be attributed to two factors, he adds.
“One is foreign investment, providing funding required by capital-intensive oil sands projects to get them to, or close to, the production stage,” Mr. Tetzlaff says. “And, two, horizontal drilling, coupled with multi-stage fracturing, which has brought tight oil and shale gas into production. A lot of the unconventional oil and liquid rich gas produced today is a direct result of this technology.”
He says that Canada needs to address infrastructure issues in order to capitalize on the world’s energy demand. To do that, Canada must get serious about identifying its customer base to countries where energy demand is on the rise, he says, suggesting that stronger relationships could be developed with Asian countries such as China, Japan, India and Korea.
“The focus in the past has always been north-to-south, as the world’s largest energy consumer is our neighbour,” he says. “Now we need to focus on west-to-east, and western provinces to the West Coast.”
The first step would be to develop stronger government-to-government relations, he says, in particular with countries such as China. He suggests building the industry together – access the world stage as one country – to take advantage of the growing need in other countries and getting a fair price for Canadian products.
“Every moment we are not, we are losing out on the opportunity to prosper as a nation,” he notes.
Mr. Langrish says the Energy Roundtable brings together decision-makers from the private and public sector in Canada and abroad to share strategic insights and information on key developments in the oil and gas sectors.
“Canada has traditionally been very strong in the technical development of its energy assets,” he says. “However, it is entering a new stage of development, where the energy sector is internationalizing, bringing increased capital, opportunities and scrutiny, which is leading stakeholders to challenge corporate decision-making.”
He says the Energy Roundtable helps these leaders understand this new operating environment, “and provides them with the tools, information and networks that they require to navigate effectively.”