Five years ago, back when Alberta’s current Energy Minister was still working in the pipeline sector, the idea of oil executives sitting around at the World Petroleum Congress discussing ways to reduce greenhouse gas emissions to net zero simply would not have been a thing.
Fresh off the back of her time at this year’s congress in Houston last week, Sonya Savage says that’s all changed – and she expects further movement toward emissions reduction efforts in 2022.
This year hasn’t been a bad one for the oil sector, the major driver of Alberta’s economy. The price of West Texas Intermediate crude rose from around US$42 a barrel in January to about US$73 this month after plummeting into negative figures briefly in 2020. Demand and production increased this year, too, as COVID-19 restrictions around the world eased.
The bounce-back, coupled with Alberta hitting record-high production, gave provincial coffers an unexpected bump. And while the Omicron variant of COVID-19 spooked an already skittish oil market earlier this month, Ms. Savage’s overall feeling for next year is one of optimism.
“We’re on solid ground with oil and gas, with both price and production. We’ve got egress. We’ve got pipeline capacity. So I think we’re in a really, really good place with solid fundamentals,” she told The Globe and Mail in an interview.
Pandemic uncertainty continues to linger. But she said she expects more plans for hydrogen projects and carbon capture facilities, and a growing interest in geothermal energy and helium in 2022, as companies diversify, pursue opportunities in emerging energy sectors and double down on their efforts to lower emissions.
Ms. Savage said the oil sector’s increased focus on net-zero emissions was a “significant shift” at this year’s World Petroleum Congress, a global energy conference that she knew well in her pre-politics career at Enbridge Inc. and the Canadian Energy Pipeline Association.
“You wouldn’t have heard that five years ago. You’d be hearing things about market access and supply-demand fundamentals, but you certainly wouldn’t have been hearing much about net zero, if anything,” she said. “But it certainly it was top-of-mind for every presentation by every company.”
Even as the world transitions to cleaner fuels, however, global energy giants made the case at the conference that oil and gas will continue to have a major slice of the global energy pie – a message that Alberta’s United Conservative government repeats.
Oil aside, the 2021 energy file was a busy one in Alberta.
After many delays, the commissioner of a widely criticized public inquiry into the funding of environmentalists finally released a report into foreign money supporting opposition to the oil sector. In short, it said the provincial government and oil sector are losing the public relations fight over resource development.
Also this year, the province released new minerals and hydrogen strategies, and issued requests for proposals for new carbon capture hubs. It initiated changes to the liability management framework for inactive oil and gas wells – an issue that has long plagued the province, particularly after a prolonged slump that saw some oil and gas companies exit the province or go bankrupt, leaving their messes for someone else to clean up.
The government also faced sustained and vocal criticism for its decision in May to quietly kill a decades-old coal policy that protected land, making it easier for companies to pursue mines in sensitive regions. Widespread public anger about its removal forced the government to backpedal. It reinstated the policy, cancelled 11 coal leases and struck the independent Coal Policy Committee in March to consult with the public on new coal rules.
The committee’s work was supposed to be done by Nov. 15, but she gave the group an extension to Dec. 31, citing the volume, breadth and depth of input from Albertans. She’s confident the committee’s report will be on her desk by the end of the year, along with a series of recommended next steps.
Ms. Savage acknowledged the province should have consulted Albertans before its rescission of the 1976 Coal Policy. ”An important part of being a responsible, accountable government is admitting when you make a mistake and fixing it,” she said. Now, she’s looking forward to getting the final report.
Also in the cards for the dying days of 2021 is the end of Alberta’s rules for curtailing oil production.
Introduced in January, 2019, they were only ever intended to be a temporary measure to deal with a glut of crude on the global market. They haven’t been used since December, 2020. And the government is confident they are no longer needed after several months of relative stability in oil storage levels, U.S.-Canadian price differentials and transport capacity on pipelines and railways.
With Enbridge’s Line 3 now operational and the Trans Mountain pipeline expansion expected to come online in early 2023, Ms. Savage said it is time to “move on” and let the regulations fade from the books.
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