Canadian oil and gas companies must do more to reduce their emissions, minister says

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Oil and gas companies must do more to reduce their emissions as the world prepares to drastically reduce its consumption of fossil fuels, Canada’s Natural Resources Minister says.

Jonathan Wilkinson made the remarks as part of a broader “call to action” to Canada’s fossil fuel industry on the eve of the 24th World Petroleum Congress in Calgary Sunday night. He told The Globe and Mail afterward that the majority of oil sands producers have made a commitment to net zero, but “substantive action” is crucial to meeting 2050 climate goals.

“We need to see purchase orders for equipment that’s actually going to be put in the ground,” he said Sunday night.

With demand for oil and gas forecast to peak for use in vehicles and combustion in the next decade, Mr. Wilkinson said, “countries that focus on producing ultralow-carbon” fossil fuels “are likely to be the last producers standing.”

Indeed, the International Energy Agency’s June oil forecast says that peak oil demand is in sight, with the fuel’s use for transport likely to drop after 2026. However, the IEA noted, overall consumption will be supported by strong petrochemicals demand.

But Mr. Wilkinson’s remarks about the future of fossil fuels kicked off something of a political bun fight with Alberta Premier Danielle Smith, who at the gala event Sunday shot back that the province owns its oil and gas reserves and will increase flows while lowering emissions as producers move toward carbon neutrality by 2050.

Asked by media on Monday about her shot across the bow at Mr. Wilkinson during her speech, Ms. Smith called the federal minister’s comments “tone deaf” and a “slap in the face” to attendees at one of the world’s largest fossil fuel gatherings.

“This is not an industry that’s winding down. It’s an industry that’s transitioning away from emissions,” she said.

“I don’t like to fight with our federal counterparts, but I’m not going to allow them to take swipes at our industry.”

Ms. Smith pointed to comments made by Saudi Aramco chief executive Amin Nasser, who on Monday morning told the congress that the “premature” phasing out of fossil fuels puts global energy security at risk.

The head of the world’s largest oil producer said there are many shortcomings in the approach the world is taking in the energy transition, including targets that are removed from the needs of energy markets and the realities of the supply-demand balance.

Mr. Nasser also took aim at the recent IEA forecast, saying it is mostly being driven by “policy rather than markets.”

Lowering emissions, however, will rely on huge investments from oil companies.

And a report released last week by the Pembina Institute, an environmental think tank, found that those companies are making no such new investments, despite being on track for their second highest profits in a decade.

Oil sands companies that are part of the Pathways Alliance, which has pledged to reach net zero by 2050, are aiming to spend more than $24-billion on emission-reduction projects by 2030.

Pathways president Kendall Dilling doesn’t disagree that large-scale investments are wanting, but he told The Globe on Monday that the group is doing “everything we humanly can to keep this project on track for 2030.”

“We’re as anxious as anybody to turn dirt and get steel in the ground and demonstrate that, yes, these projects are going to happen,” he said. “But you can’t wave a magic wand and accelerate that by three years. You’ve got to go through that front-end process and we’re doing it as quickly as we can.”

Mr. Wilkinson acknowledged that emissions reduction will also rely on the federal and provincial governments establishing all of the rules and regulations needed to hasten activity – particularly in carbon capture and sequestration.

Ottawa and Alberta agree that Canadian fossil fuel production should be net zero by 2050. They also agree that technologies such as carbon capture will be key to getting there, and that the two levels of government need to work together.

Yet there remains a gaping chasm between the two when it comes to global fossil fuel demand in the future, and what that means for Canadian production.

Mr. Wilkinson told The Globe he’s not opposed to any source of energy, as long as the emissions issues are addressed. That includes natural gas, he said, which can have a role going forward “as long as you can capture the carbon and you can sequester it.”

Ms. Smith is adamant about the continuing role for combustion vehicles, but Mr. Wilkinson countered that “from a scientific and environmental perspective, that just can’t be true or we’re going to be in a position where the environment is going downhill very, very quickly.”

“If Premier Smith is right, the environmental consequences are really, really bad.”