Skip to main content

Energy cochair and partner at Osler, Hoskin & Harcourt LLP. She has worked for clients with oil sands operations.

There is considerable uncertainty in the Canadian energy industry today due to a number of factors, including a precipitous decline in oil prices, the chilling effect of foreign investment rules, constrained access to markets and, most recently, a new political agenda in Alberta.

Although this downturn is different from previous ones, there are still positive indicators to be found. Where others see challenges, Alberta and the energy industry see opportunity, and this vision is generating innovative, creative and resilient strategies.

Story continues below advertisement

Some of the key innovative strategies we are seeing include:

Sale of royalty interests on existing oil and gas rights

This involves the sale of a royalty income stream to a buyer that has capital but wants to avoid risk associated with developing the underlying resource. Such transactions deliver capital that the seller can reinvest in other areas of its business, especially higher-return operations, and gives buyers ownership of a percentage of the production or production revenues generated from the lands. These transactions are particularly well suited for pension funds or other investors looking to cap their investment, avoid abandonment and reclamation liability and, if characterized as an interest in land, provide greater security against insolvency of the payor. It is also an easier transaction for investors who are new to the space to understand. This type of transaction is entrepreneurship in its purest form.

Midstream joint ventures

This involves a producer/owner of midstream infrastructure selling all or a portion of gas processing facilities (for example) to a midstream company in exchange for cash and a long-term processing arrangement. The producer receives cash it can use to pay down debt, acquire other assets or deploy in additional drilling activity, while securing long-term priority access to use the facility at negotiated rates. It may also require facility expansion so sufficient capacity is available to handle the producer's anticipated additional production. Encana's recent sale of gas gathering and compression assets to Veresen Midstream and Cequence Energy's sale of an interest in the Simonette gas plant to Kanata Energy Group, are examples of this type of arrangement.

Aboriginal partnerships

Energy companies continue to partner with First Nations. Native American Resource Partners is an example of a private investment fund which structures, finances and implements direct equity participation in resource projects with First Nations. This approach creates partnerships that jointly work on sustainable development of resources, provides First Nations with a seat at the table and makes needed capital available to the resource company.

Story continues below advertisement

Technology licensing

Although not strictly new, Canadian energy service companies continue to be targeted by foreign investors consolidating access to certain fracking and other technologies that have been developed in the pursuit of Canadian unconventional resource development.

Given the volatility and cyclical nature of the industry, entrepreneurship has been and always will be a hallmark of the energy business. This has led to the creation of resource companies that are sophisticated, innovative and resilient.

It has also led to an unprecedented level of sharing of best practices among competitors, as evidenced by Canada's Oil Sands Innovation Alliance, a collection of 13 companies representing almost 90 per cent of Canada's oil sands production. Their focus on four environmental priority areas – land, water, tailings and greenhouse gases – allows them to share and build on the development and deployment or technologies most likely to achieve that objective.

Alberta's energy industry continues to meet the challenges of its times. Survival and innovation techniques are well-entrenched in the patch.

Report an error
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies