That Germany has given up on Canada to supply liquefied natural gas (LNG) and instead signed a massive multi-year LNG purchase agreement with Qatar has left many angry and disappointed.  

Investment manager and perennial oil bull Eric Nuttall recently visited Qatar and Saudi Arabia and wrote an opinion piece for the Financial Post titled, “Canada could be as green and wealthy as Qatar and Saudi Arabia if government wakes up – Instead of vilifying the oil and gas sectors, Canada should champion them.” 

Nuttall described how Saudi Arabia and Qatar are investing their enormous energy wealth to make life better for their citizens. This includes decarbonizing future domestic energy supplies and making large investments in infrastructure.   

Nuttall concludes, “Why is it that Qatar, a country that embraced its LNG industry, has nearly three times the number of doctors per capita than Canada? We can do it all: increase our oil and natural gas production, at the highest environmental standards anywhere in the world, thereby allowing us to help meet the world’s needs while benefiting from its revenue and allowing for critical incremental investments in our national infrastructure…This could have been us.” 

The country most often mentioned that Albertans should emulate is Norway. 

Alberta’s Heritage Savings and Trust Fund has been stuck below $20 billion since it was created by Premier Peter Lougheed in 1976.  

Norway’s Sovereign Wealth Fund, which started 20 years later in 1996, now sits at US$1.2 trillion. 

How many times have you been told that if Alberta’s politicians weren’t so incompetent, our province would have a much larger nest egg after 47 years?  

After all, Canada and Alberta have gobs of natural gas and oil, just like Qatar and Norway. 

Regrettably, that’s all we have in common.  

That Qatar and Norway’s massive hydrocarbon assets are offshore is a massive advantage that producers in the Western Canada Sedimentary Basin will never enjoy. All pipelines are submerged. There are no surface access problems on private property, no municipal property taxes or surface rights payments, and there are no issues with First Nations regarding land claims, treaty rights and constitutional guarantees. 

Being on tidewater is a huge advantage when it comes to market access, greatly reducing operating and transportation costs. 

But it’s more complicated than that, and has been for a long time. In 1990, Olympic athlete and businessman William G. Gairdner wrote a book titled, “The Trouble with Canada – A Citizen Speaks Out.” It takes Gairdner 450 pages to explain how one of the most unique places in the world in terms of resource wealth and personal and economic opportunity was fading fast. 

That was 33 years ago. Nothing has improved. 

As I wrote in my own book about the early days of settlement and development, citizens expected little from their governments and got less. 

Today politics increasingly involves which party will give the most voters the most money.  

The book’s inside front cover reads how Gairdner was concerned that Canada was already “caught between two irreconcilable styles of government, a ‘top down’ collectivism and a ‘bottoms-up individualism;’ he shows how Canadian society has been corrupted by a dangerous love affair with the former.”  

Everything from the constitution to official bilingualism to public health care were identified as the symptoms of a country heading in the wrong direction. 

But Canadian “civil society” often regards these as accomplishments. 

The constitution enshrines a federal structure that ignores representation by population in the Senate thus leaving the underpopulated regions vulnerable to the political desires of central Canada. This prohibited Alberta’s closest access to tidewater for oil through Bill C48. 

Official bilingualism and French cultural protection has morphed into Quebec intentionally blocking Atlantic tidewater access for western Canadian oil and gas.  

In the same country! 

Another election will soon be fought in Alberta over sustaining a mediocre public health care system that continues to slide in international rankings of cost and accessibility. 

What’s remarkable about comparing Canada to Norway or Qatar for missed hydrocarbon export opportunities is how many are convinced that the Canadian way of doing things is equal, if not superior, to that of other countries. 

But neither Norway or Qatar have the geographical, jurisdictional, regulatory and political obstacles that impair resource development in Canada. 

Norway has over 1,000 years of history shared by a relatively homogenous population with similar views on many issues. Norway has a clear sense of its national identity. 

As a country, Canada has only 156 years in its current form and is comprised of Indigenous people and newcomers from all over the world who are still getting to know each other.  

In the endless pursuit of politeness, today’s Canada recognizes multiple nations within its borders.  

Norway and Qatar only have one. 

While relatively new as a country, Qatar is ruled by a “semi-constitutional” monarchy where the major decisions about economic development are made by a handful of people.  

Canada has three layers of elected governments – federal, provincial and municipal – that have turned jurisdictional disputes, excessive regulation, and transferring more of everything to the public sector into an industry.  

Regrettably, saying that Canada should be more like Norway or Qatar without understanding why it can’t be deflects attention away from our challenges and solutions. 

David Yager is an oilfield service executive, oil and gas writer, and energy policy analyst. He is author of  From Miracle to Menace – Alberta, A Carbon Story.  

The unaltered reproduction of this content is free of charge with attribution to Canadian Energy Centre Ltd.   

Liberal climate policies and the future of Alberta’s oil and gas industry are again headline news thanks to recent remarks by Energy Minister Jonathan Wilkinson and Prime Minister Justin Trudeau.  

This has provided multiple opportunities for Alberta Premier Danielle Smith to comment on the not always harmonious relationship between her province and the federal government, and lots of fodder for opinion columnists and other commentators.  

The challenge is separating actions from words.  

Is Ottawa actually executing a master plan to shut down Canada’s oil and gas industry? 

Or have world events changed more quickly than the federal government can develop different policies that are attractive to core supporters? 

On January 3, Wilkinson announced that in 2023 legislation would be introduced to underpin a 2019 election promise of a “Just Transition” for oil workers who lose their jobs due to a switch to low-carbon energy. 

Just Transition was invented by climate change activists years ago to demonstrate that besides caring deeply about all of humanity through the replacement of fossil fuels, they also cared about the oil workers who would lose their jobs.  

But after eight years in the economic dumpster, these two words are infuriating in the oilpatch. Lots of jobs have already been lost in part because of federal climate policies. 

Three days later Prime Minister Trudeau fanned the flames. A CBC article opened, “Prime Minster Justin Trudeau urged the government of the main oil-producing province of Alberta to use its budget surplus to help bolster tax credits meant to help scale up carbon capital and storage and reduce emissions.” 

While that seemed harmless enough, he added, “We’ve seen for a while Alberta hesitating around investing in anything related to climate change.”  

This is frustrating for Alberta. In 2007, the province introduced North America’s first larger emitter carbon tax and directed the proceeds to a multitude of emission reductions initiatives. One was the Shell Quest carbon capture and storage (CCS) project.  

With government financial support, since 2015 Quest has captured and sequestered over six million tonnes of CO2. This has helped prove CCS to be technically viable and has significantly advanced key elements of design, equipment and processes.  

But difficult to understand comments about oil and gas by the prime minister are not new. Last August he stated “there has never been a strong business case” for LNG exports from Atlantic Canada to Europe. 

While there may be insufficient gas pipeline capacity to the east coast or a lack of political support in Quebec, the “business case” as defined by economics has never been better.  

Meanwhile, oil and gas production continues to grow. This is a peculiar way to extinguish Canada’s fossil fuel industries. 

According to ARC Energy Research Institute, since the Liberals assumed office in 2015 Canadian oil and gas production has increased from an average 6.53 million barrels of oil equivalent per day in 2014 to 8.05 million boe/d in 2022, a 23 per cent gain. 

Conventional oil and natural gas liquids output is up about 4 per cent, natural gas production 9 per cent, and oil sands 62 per cent. The main increase in oil sands output is the result of projects that were underway when the Liberals were elected and were largely completed by 2019. But in the last three years, oil sands output has increased another 8 per cent. 

The production outlook is positive. The completion of LNG Canada in 2025 will increase natural gas exports by about 1.8 billion cubic feet per day, or 10 per cent of total Canadian output. Because of growing LNG exports from the U.S., there is no reason to believe that this won’t allow gas producers to increase output by the same amount to continue to supply current customers.  

More LNG exports are planned. Japan’s recent request for Canadian LNG to replace Russian imports will be difficult for Ottawa to ignore. Through Mitsubishi, Japanese interests already own a piece of LNG Canada, which is in the early stages of considering doubling its export capacity. 

In the 2021 version of Canada’s Energy Future from the federal Canada Energy Regulator (CER), oil sands production is expected to continue to rise until 2032 and will still be at 2021 levels in 2048. 

It appears the Trans Mountain pipeline expansion will be completed, although the final cost may be eye-watering. This will nearly triple throughput and deliver another 590,000 barrels per day to tidewater.  

U.S. oil production is not growing as quickly as thought a year ago, so existing heavy oil exports south will continue. TMX will be an incentive for producers to increase output, something the CER anticipates.  

But on overall fossil fuel policy, Canada stands alone in several key areas. Canada is the world’s fourth largest oil producing country. For the nine other top 10 producers (in order), none of United States, Saudi Arabia, Russia, Iraq, China, UAE, Iran, Brazil or Kuwait have introduced escalating carbon taxes, hard emission ceilings, or passed legislation banning oil export tankers.  

“Just Transition” programs to help oil workers do something else in these times of labor shortages, security of supply concerns and rising commodity prices would be incomprehensible every other major oil producing country except perhaps the U.S. 

According to BP’s Statistical Review of World Energy, these 10 countries produce about 65 million barrels per day, two-thirds of total global output. If Canadian oil stopped tomorrow, the total would be about 60 million. 

It’s hard understand how reducing or eliminating Canadian output would move the needle on world oil supply or materially affect emissions. 

Confused? It’s not your fault.  

David Yager is an oilfield service executive, oil and gas writer, and energy policy analyst. He is author of  From Miracle to Menace – Alberta, A Carbon Story.  

The unaltered reproduction of this content is free of charge with attribution to Canadian Energy Centre Ltd. 

It seems like just the other day the wrath of the world was coming down on oil sands and coal.

To protect the atmosphere, Canada has been reducing coal-fired power generation for years. It started in Ontario then moved to Alberta. Saskatchewan is next. New Brunswick is supposed to stop by 2030, but that province claims it can’t be done.

Global coal consumption is rising again because it meets the cost and availability requirement created by energy shortages and rising prices. On December 16, the International Energy Agency reported, “The world’s coal consumption is set to reach a new high in 2022 as the energy crisis shakes markets.”

For energy, the biggest single change in 2022 is the remarkable shift in public attitudes towards fossil fuels.

The global energy complex is under assault by Russia’s invasion of Ukraine, the exposed shortcomings of wind and solar, years of underinvestment in fossil fuels, and rising inflation and interest rates.

But for the past ten years, there has been an all-out crusade against fossil fuels. Oil company CEOs were branded climate criminals. It was morally reprehensible to own fossil fuel company shares or loan money to oil, gas or coal producers. Elections were won in Canada, the US and in Europe on pledges to replace fossil fuels.

No cost was too great, because the cost of doing nothing thus permitting unchecked climate damage was greater.

What happened? How did the channel change to rapidly? Why after years of public and political attacks on the source of over 80 per cent of the world primary energy, has affordable energy on demand now become more important than where it comes from?

Price, the most fundamental driver of economics and human behavior.

The November 2022 global survey from public opinion research firm IPSOS titled “What Worries The World” tells the story.

IPSOS explains, “This 29-country Global Advisor survey was conducted…among 20,466 adults aged 18-74 in Canada, Israel, Malaysia, South Africa, Turkey and the United States, 20-74 in Indonesia and Thailand, and 16-74 in all 21 other countries.”

IPSOS charts the top six issues for the past two years. Poverty, crime, unemployment and corruption have always been important, and consistently ranked among the top five.

But in November 2020, inflation only registered among eight per cent of respondents. Two years later it is 42 per cent. Coronavirus and the unemployment that accompanied the lockdowns were the top two issues. The others remain in a consistent range.

Two years ago was the peak of the “oil is dead” mantra, and when many bright ideas for a fossil fuel free future were concocted. In a post-pandemic world, multiple voices claimed we must Build Back Better, ensure a Resilient Recovery, engineer the Great Reset.

The plan was to use government policy and borrowed money to create jobs through the large-scale replacement of fossil fuels.

Coined the “energy transition,” it was achievable and inevitable thanks to incredible advances in renewable energy cost and supply. Canada – the world’s fifth largest combined oil and gas producer – could lead the charge with minimal disruption thanks to a new federally-funded retraining program for displaced oil workers. This was called a Just Transition.

What happened?

The invisible hand of Adam Smith punched the world in the nose.

The only part of the demise of fossil fuels that was successful was reduced supply. As the economy recovered, consumers learned the hard way that low carbon energy sources were terribly oversold in terms of reliability, and demand for fossil fuels outstripped supply.

Prices for fossil fuels rose at the same time that inflation and interest rates reduced disposal income.

As demand grew, fossil fuel shortages were reflected in the price. When Russia – one of the world’s largest oil, gas and coal suppliers – invaded Ukraine, the gravity of the situation escalated immediately.

What the IPSOS survey dramatically illustrates is the number one concern for the world as 2022 ends is the rising cost of everything.

We’ve been told repeatedly that continued fossil fuel consumption will cause serious climate disruptions. No expense today will exceed the cost of future damages.

However, the more pressing issue today is still being alive in 2050 because of the rising cost of everything, including energy. Worrying about what the temperature, storm intensity or chemical composition of the atmosphere may be in 28 years has become an unaffordable luxury.

So fossil fuels are once again what they have always been – reliable and affordable sources of energy.

Happy New Year.

David Yager is an oilfield service executive, oil and gas writer, and energy policy analyst. He is author of  From Miracle to Menace – Alberta, A Carbon Story.  

The unaltered reproduction of this content is free of charge with attribution to Canadian Energy Centre Ltd. 

If you’re confused by 21st century energy geopolitics, it’s not your fault. 

 The Russia/Ukraine war, EU’s economic crisis, global energy prices, rising inflation and interest rates, and the G7/EU price cap on Russian oil exports announced December 5 have created daunting challenges for international politics and diplomacy. 

The most recent solution is one whereby G7 member Canada has helped make oil cheaper for the world without relaxing existing commitments to increase Canadian energy costs through carbon taxes, emissions caps, and the Clean Fuel Regulations.  

For carbon taxes to be an effective deterrent for fossil fuel consumption, the price of oil, gas and coal is supposed to go up. We’ve been told repeatedly that “a price on pollution” is essential to avoid climate disaster. 

But the December 5 Russian oil price cap mechanism is engineered to cause oil prices to go down. This stimulates consumption and makes renewables less competitive.  

While U.S. President Joe Biden’s energy policies are rife with contradictions, one of his administration’s primary goals has been to keep oil prices as low as possible.  

For a president that ran on a climate protection platform in 2020, this is not intuitive. 

Following the symbolic cancellation of Keystone XL in early 2021, oil prices began to rise. For the past 18 months Biden has reached out to OPEC, Saudi Arabia, Iran and Venezuela in a quest to increase oil production and suppress gasoline prices. 

The most recent move saw the U.S. encouraging Chevron to increase production from its mothballed and sanctioned Venezuelan assets. Get the world more oil. Just don’t give any money to Venezuela’s government. 

At the same time, America’s Strategic Petroleum Reserve has gone into competition with domestic producers by putting about one million barrels per day of crude into world markets for months. Lower prices send a signal to oil companies not to drill. High prices have the opposite effect. 

When Biden assumed office in January 2021, the SPR held 638 million barrels. As of mid-October it was down to 405 million barrels, a 37 per cent decline. SPR drawdowns are expected to end this month. The reserve could be down to 350 million barrels by then. This has helped keep oil prices lower for much of 2022. 

After Russia’s invasion of Ukraine in February, an angry EU concluded that the most effective non-military way to punish Russia was to quit buying its oil and gas, thus squeezing funds for its war machine. An oil embargo was planned for late 2022. Oil prices rose in anticipation of a supply shortage. 

Instead, on December 5 the G7 countries and the EU adopted a U.S.-led plan to allow Russian oil exports but put a price ceiling of US$60 a barrel. Noted oil guru Daniel Yergin said in an interview, “It’s the end of the global oil market as we’ve known it for the last 30 years. It’s now a partitioned oil market and no one can speak with any authority as to how it will play out.” 

And the price cap became a floor price. A Reuters article December 6 opened, “When U.S. officials first floated the idea of capping Russian oil export prices in response to a planned European embargo in March, they pledged to squeeze revenue to Russia’s war machine, while avoiding a devastating oil price spike. But keeping Russian oil on the market and global prices low soon became the bigger priority as oil prices jumped.” 

Analysts have concluded this price cap will have little impact on Russia’s oil revenues because Asian countries like India and China are thrilled to purchase more oil at lower prices. What Russia loses on price will be offset by volume. 

Quoting unnamed U.S. Treasury officials, Reuters wrote, “…the price cap is ‘institutionalizing’ current market discounts, arguing that plans for the cap were responsible for price declines over the past several months…” 

The U.S. opposed a complete EU Russian oil boycott because it would drive up U.S. prices. The article states the “…true motivation after March has been primarily to preserve Russian oil flows…if there was an oil price spike, not only will it hurt us economically and politically, but it’ll damage Western support for Ukraine. As the G7 formed the plan, India and China have snapped up heavily discounted Russian oil, and are expected to continue big purchases outside the price cap, moves endorsed by Treasury Secretary Janet Yellen.” 

At the G20 meetings in Asia last month, Yellen’s position was clear. An Arab News headline read, “Oil prices fall; Yellen says price cap on Russian oil will benefit China.” 

It continued, “Yellen told reporters…that China and other buyers of Russian oil will have more leverage to negotiate lower prices. ‘We see the price cap is something that benefits China and India, and benefits all purchasers of Russian oil’.” 

Maybe it’s more complicated than it appears. Perhaps central planning feared that a truly isolated Russia would retaliate with its nuclear arsenal. And a prolonged war in Ukraine and lower oil prices was the best solution under the circumstances. 

But Canada’s position is remarkable.  

Support lower oil prices for the world but make Canadians pay more in the name of climate change.  

This explains why I’ve never been tapped by Ottawa for advice on complex public policy issues. 

David Yager is an oilfield service executive, oil and gas writer, and energy policy analyst. He is author of  From Miracle to Menace – Alberta, A Carbon Story.  

The unaltered reproduction of this content is free of charge with attribution to Canadian Energy Centre Ltd.  

“Fossil fuel addiction is hijacking humanity. Renewables are the exit ramp from the climate hell highway. Negotiators at COP27 have a chance to make a difference. They must make it here and now.” 

So tweeted United Nations Secretary-General Antonio Guterres on November 18 as COP27 sought consensus on a final communique in Egypt before 30,000 people from 190 countries returned home to the real world of rising energy prices, inflation, and what will surely be a recession in 2023. 

Despite yet another alarmist warning from the UN leader, developing countries rejected European Union pressure to commit to hard reductions in fossil fuel consumption.  

The primary goal of governments today is to keep the lights on and economies moving. Fossil fuels remain the most affordable continuous energy source. Demand is rising. 

Instead, COP27 announced an agreement coined “loss and damage,” a fund for vulnerable countries to receive compensation for future climate damage caused by the emissions of others.  

It was labelled “historic.” They always are. But it lacked details and enforcement mechanisms.  

“This COP has taken an important step towards justice,” said Guterres. “Clearly this will not be enough, but it is a much-needed political signal to rebuild broken trust.”    

But it’s never enough. Because terrifying people about climate destruction and organizing conferences to prevent it have become one of the main reasons for the UN’s existence. 

The first COP was held in Berlin in 1995, a dedicated climate event conceived at the 1992 Earth Summit in Rio de Janeiro. This was followed by the Kyoto Protocol for a global emissions trading system in 1997, $100 billion annually in climate mitigation funds for developing countries in 2009’s Copenhagen Accord, and the Paris Agreement in 2015 which set a maximum acceptable global temperature increase and the emission reductions required to achieve it.  

The UN’s pivot from protecting the peace to protecting the planet began in 1972 in Stockholm. When it was created in 1945, the founding charter opened,  “…to save succeeding generations from the scourge of war, which twice in our lifetime has brought untold sorrow to mankind.” 

But by 1972, the countries the founding nations united to protect themselves against – Germany and Japan – were members. 

Environmental concern was a growing political issue. A quarter century of peace and prosperity following the Second World War gave the wealthy west the time and money to worry about less immediate issues than employment and security.  

For the UN, protecting the planet would maintain financial and public support and vastly expand its mandate. 

Who would dare call that a bad idea?  

At Sweden’s invitation, in 1972 the UN sponsored the first of dozens of official multi-country gatherings to discuss the future of the physical planet. It was called the United Nations Conference on the Human Environment.  

Stockholm also marked the official recognition of unelected environmental lobby organizations as legitimate voices in the future of humanity. They were invited to join nations in world affairs for the first time. 

The closing Stockholm Declaration contained 26 principles. These included protecting human rights, habitat, natural resources, and combatting excessive population growth. 

An issue raised at Stockholm by India’s Indira Gandhi that continues today is the linkage between environment and wealth. Declaration 9 included “the transfer of substantial quantities of financial and technological assistance” to developing countries to help cope with environmental deficiencies.  

Other commitments were to end weapons of mass destruction and stop polluting the oceans.  

Principle 25 declared, “States shall ensure that international organizations play co-ordinated, efficient and dynamic role for the protection and improvement of the environment.”  

Global warming – later renamed climate change – wasn’t mentioned. By 1991 it would become the primary issue. 

Forty years later, in an article titled “Stockholm: Birth of the Green Generation,” the BBC wrote that “Stockholm was the first UN summit to feature, even welcome, groups from civil society… environmental campaign groups, who used the now familiar smorgasbord of marches, song, demonstrations and dialogue to press issues.” 

Before Stockholm, the Sierra Club was about protecting hiking trails. Greenpeace opposed nuclear testing and saved whales. The Pembina Institute resulted from a sour gas blowout near Lodgepole. 

Half a century later these outfits are all climate all the time. They are the official conscience of COP gatherings, reminding attending politicians that no matter what issues they may face at home, do what they say or climate disaster is inevitable.  

So began the gradual subordination of elected governments of sovereign nations to unelected and unaccountable organizations.  

And why we get Antonio Guterres continually telling us what to do and think and how to live our lives. Don’t forget 2021’s Intergovernmental Panel on Climate Change report, which Guterres called “a code red for humanity.” 

The repeated justification for Canadian federal climate policy is meeting or exceeding our 2015 UN Paris commitments. We’re told that’s why we must cap oil and gas emissions and use less fertilizer.  

But COP27 has proven yet again that the people we’re supposedly protecting have other priorities.  

Finance Minister and Deputy Prime Minister Chrystia Freeland recently mused publicly about “friend-shoring,” enhanced cooperation among like minded governments to isolate Russia and China for their bad international behavior.  

The world is increasingly at war. The weapons are armies, Internet, subterfuge, political interference, boycotts, and sanctions.  

Consensus at COP is impossible.  

Isn’t it time Canada did something else?  

David Yager is an oilfield service executive, oil and gas writer, and energy policy analyst. He is author of  From Miracle to Menace – Alberta, A Carbon Story.  

What is the long-term future of a society that attacks its own economic foundation for political gain? 

North Americans must ask this question. 

By putting politics first, some politicians in both the U.S. in Canada undermine North America’s core strengths of energy security, economic competitiveness and continued prosperity.  

Many elections have been won on the future of energy. Fossil fuels are bad. Renewables are good. Financial support for oil, gas or coal producers was branded as a crime against the future of civilization. Those who asked questions were labelled climate change deniers. 

But that was so 2021. Everything has changed. 

Since the Russian invasion of Ukraine in February, the western world is determined to figure out how to replace oil and gas from one of the world’s largest producers. 

You’d think this would precipitate different messaging from both Ottawa and Washington. 

Modern politics obviously leaves no room for flexibility.  

But this behavior is confined to North America. 

Because the rest of the world is quickly rewriting energy and climate policies to adjust to new realities.  

The latest round of oil bashing followed the release of third-quarter earnings by American and Canadian producers. Big profits. Record earnings. 

While the alleged driver is artificially high commodity prices, the unrecognized contributor is operating costs that have been slashed to the bone to survive seven years of low commodity prices and attacks from politicians, environmentalists, the public and capital providers. 

Oil companies have been repeatedly told they have no future. Only 18 months ago the International Energy Agency told oil producers not to invest in new supplies. A CNN headline read, “Oil companies advised to stop drilling now to save the planet.” 

So producers have been paying down debt and returning capital to shareholders. When they do get bright ideas about increasing output, legislative, regulatory and permitting obstacles continue.  

After ExxonMobil, Chevron, Shell and TotalEnergies announced big Q3 profits, Biden told a Democratic party event, “Can’t believe I have to say this, but giving profits to shareholders is not the same as bringing prices down for American families. I’m going to keep harping on it. They keep talking about me picking on them – they ain’t seen nothing yet. I mean it. It outrages me.” 

A California Democrat called oil profits “obscene.” Implicit in that adjective is knowing exactly what oil company profits should be. 

Which for the doctrinaire left is zero. That’s no solution to the global supply crisis. 

It’s not about energy security, but next week’s mid-term elections. What could matter more?  

Federal Environment Minister Steven Guilbeault gave Canadian producers similar treatment with a different spin. In a video, he questioned again why producers weren’t putting more money into tackling climate change. A Canadian Press story wrote, “This is the third time in the last six months Guilbeault’s frustration has spilled over as oil company profits soar.” 

Having spent most of his adult life trying to put oil producers out of business, the minister wants to see more money spent on his priorities, not rewarding long-suffering shareholders. Increased production is never mentioned. 

That North American oil producers are again profitable is good – and would eagerly invest in increased output under different policies – is lost on politicians in Washington and Ottawa.  

The entire developed world is envious of the energy security and low prices enjoyed in the economic fortress of North America. European companies are considering relocating to the U.S. because of stable supplies of lower cost energy.  

Natural resources created Canada. Coal at the western end of the vast prairies gave the backers of the national railroad the confidence to complete the transportation link that connected the country.  

Huge oil reserves helped the U.S. win international wars in Europe and the South Pacific and become an economic powerhouse and global force. In the Second World War, Canada contributed high-octane aviation gasoline refined from the Turner Valley oilfield. 

When oil prices exploded in the 1970s and again early this century, it was the western oil companies that put new supplies on stream and reduced prices. This benefited the entire world. 

In the late 1970s, it was the North Slope of Alaska, Europe’s North Sea and Canada’s oil sands that returned balance to world oil markets. 

When crude hit US$146 a barrel in 2008 – which helped precipitate the world financial crisis – it was Canada’s oil sands and U.S. shale oil that put 10 million barrels per day of new production on stream by 2020. This collapsed world oil prices in 2015 and gave the world five years of unrepeatable economic prosperity. 

Today, the same oil producers that saved the day twice are criticized by their own governments. 

With energy security taken for granted last decade, plentiful oil at low prices allowed politicians in Europe, Canada and the U.S. to win elections by campaigning against fossil fuels and the promise that wind and solar power were suitable alternatives. 

But as Europeans plead for more fuel from North America to save the economy and liberate them from Russian energy, the governments that could help the most instead continue to campaign against the very industry that has made Canada and the U.S. the envy of the western world. 

Surely this cannot be sustainable. 

David Yager is an oilfield service executive, oil and gas writer, and energy policy analyst. He is author of  From Miracle to Menace – Alberta, A Carbon Story.  

The unaltered reproduction of this content is free of charge with attribution to Canadian Energy Centre Ltd.

The political success of Alberta premiers dating back 50 years has been closely linked to the oil and gas business and federal/provincial relations.  

Premiers fortunate enough to be in office when the oilpatch and economy were booming were popular and won multiple elections. Challenging the federal government when its policies negatively affect Alberta has been a reliable vote-getter, especially when it involves resources. 

Those who were in office when Alberta’s main industry was struggling, or were seen as cooperating with Ottawa when its policies negatively affected oil and gas, have not been treated as kindly. 

The primary drivers of Alberta’s resource prosperity are geology, market access and world events. The government of the day invariably takes credit when things are good, and gets more blame than it should when they aren’t. 

This chart shows the percentage of total provincial funding provided by non-renewable resource revenues back to 1970. The two longest serving premiers governed when oil and gas were very kind to Albertans and the treasury. 

Good government, good fortune or both? 

In 1971, Peter Lougheed’s Progressive Conservatives replaced the Social Credit dynasty that had governed since 1935. That year the province received nearly 25 per cent of its budgetary revenues from non-renewable resources.  

Lougheed’s administration got a huge boost in 1973 thanks to OPEC. Over the next seven years the price of oil increased by a factor of 10, creating an economic boom of previously unimaginable proportions. By 1978 over 77 per cent of the province’s revenue came from resources. New ways to deploy all the cash included creating the Heritage Fund. 

But this newfound prosperity also caught Ottawa’s attention, resulting in epic political battles with Prime Minister Pierre Elliot Trudeau over provincial resource revenues and control. 

These two circumstances made Lougheed fabulously popular. He won four elections before stepping down in 1985.  

Federal/provincial tensions were not this strained again until Prime Minister Justin Trudeau was elected in 2015 and picked a different fight with Alberta, this one over production growth, emissions and climate change. 

In 1986, Don Getty took charge of a much different Alberta. The oil price collapse, recession and high interest rates of the early 1980s clobbered the province. Getty faced big spending, collapsed revenue, and the belief that direct government investment could successfully diversify the economy. 

In 1992 Calgary mayor Ralph Klein won the PC leadership on a platform of cutting spending. By the late 1990s, rising gas prices and production volumes vastly improved provincial revenues. This was followed early this century by higher oil prices and huge oil sands expansion.  

As Alberta’s economy recovered, Klein was very popular and won four elections. By 2004 Alberta had retired all its debt, put $17 billion in the Sustainability Fund, and had enough spare cash to send $400 to every Albertan in 2005.  

But after Klein got only 55 per cent support at a PC leadership review in 2006, he stepped down as leader. That was the same year that resource revenue exceeded 40 per cent for the first time since 1982. 

Over the next 16 years, six premiers – Ed Stelmach, Alison Redford, Dave Hancock, Jim Prentice, Rachel Notley and Jason Kenney – encountered multiple economic challenges on resources, some self-inflicted. After resource revenues peaked at $14.3 billion in 2006, they began declining because of falling natural gas prices and volumes and later oil prices. The five-year average from 2015 to 2021 was only $4.5 billion. 

At the same time, government spending increased significantly because of infrastructure required to support continued population growth, much of it related to the oil sands construction boom. Deficits and debt grew quickly. 

For Alberta’s treasury, the total cost of oil sands expansion preceded offsetting royalty income by many years.  

Then because of climate change, the western world declared war on fossil fuels and Alberta’s oil sands. Pipelines were blocked. Capital fled. Global capital providers virtue-signaled by refusing to continue to finance Alberta oil. 

From 1970 to 2015, resources supplied an average of 30.9 per cent of provincial revenue. Because of collapsed commodity prices and rising spending, from 2016 to 2021 it was only 9.2 per cent.  

All that changed in 2021. As the pandemic lockdowns ended, oil and gas prices began increasing. Because of geopolitical events, prices soared in early 2022. More oil sands projects finally reached payout and started paying higher royalty rates.  

Alberta is back in the chips in ways nobody imagined a year ago. The latest budget update reads, “The 2022-23 first quarter revenue forecast has dramatically changed, with West Texas Intermediate oil prices expected to be US$22 per barrel higher than estimate in Budget 2022, and resource revenue up to $14.6 billion.” 

Revising its Budget 2022 estimates, for 2022/23 Alberta now forecasts resource revenue could reach $28.4 billion and provide 37.4 per cent of provincial revenue. 

Because of federal policies since 2015 and the continued plan of accelerated emission reductions and rising carbon taxes, the kindest word to describe Alberta’s political relationship with the federal government is “strained.” 

It could get worse. 

If the province’s financial targets materialize – and if a recession, inflation, rising interest rates and falling house prices again make Alberta’s prosperity conspicuous on the national stage – then what? If Alberta booms while the rest of Canada struggles, how will that affect federal policy?  

Petroleum and Alberta politics are intertwined. That’s unlikely to change.  

David Yager is an oilfield service executive, oil and gas writer, and energy policy analyst. He is author of  From Miracle to Menace – Alberta, A Carbon Story.  

The unaltered reproduction of this content is free of charge with attribution to Canadian Energy Centre Ltd. 

Saudi Arabia has reminded us again of the power of the world’s largest oil producer. Through Saudi Aramco, one country with only 35 million people controls 11 per cent of global supply.  

Saudi Arabia can influence global oil prices simply by adjusting output. It has demonstrated this many times. The Saudis also control OPEC, but don’t advertise it. 

In 1973, OPEC cut back production to punish western interference in Middle East politics. This oil embargo and subsequent price spike plunged the world into an economic recession that lasted more than a decade. 

When oil prices fall too far, the Saudis cap the downside by reducing output. This supports other producers and has helped maintain multiple and diverse oil supplies.  

Oil is critical to the Saudi economy. The Saudis would like to sell as much oil as can be produced sustainably at a fair price as long as possible.  

A price too low hurts their economy. 

A price too high hurts customers and the long-term market. 

However, the price that is “just right” remains impossible because of geopolitics and macroeconomics.  

On October 4, Aramco CEO Amin Nasser publicly expressed deep concern about current oil markets in a world that has been determined to impair the continued development of the same resource that society cannot survive without. 

Nasser said, “If China were to open up a little we will find our (spare) capacity eroded completely…the world should be worried because this is no cover for any recovery or any unforeseen interruption anywhere in the world.” 

Another example is air travel returning to pre-COVID levels, which would increase demand by 1.7 million barrels per day. 

Aramco has long warned that underinvestment would cause supply shortages and economic disruption. But discouraging the development of new production is what the western world has wanted because of concerns about climate and decarbonization. 

After the COVID-19 pandemic lockdowns of early 2020, oil demand and prices collapsed. OPEC morphed into OPEC+ by cooperating with Russia to control output. When OPEC+ shut in 10 million barrels a day, it stabilized prices and protected producers in Canada, the U.S. and around the world from financial collapse.  

At that time having Saudi Arabia and Russia – hardly beacons of democracy or human rights – in control of 20 per cent of the world’s oil supply didn’t seem to bother anybody. 

After all, fossil fuels were a sunset industry. 

In early 2021, Joe Biden was sworn in as U.S. president. So began contradictory and unpredictable changes in U.S. energy policy that now reinforce Aramco’s warning.  

Because nobody knows what the White House will do next.  

First Biden cancelled the Keystone XL pipeline, which helped cap growth in Canada’s massive oil sands resource. This was part of the anti-fossil fuel platform that helped the Democrats win the 2020 election. 

But as oil prices began rising in mid-2021, Biden looked offshore for more oil to keep U.S. prices down. At a G20 meeting in November on his way to the COP26 climate conference in Glasgow, Biden called on Saudi Arabia to increase output. 

This was an odd favor to ask from a U.S. president who, while on the campaign trail a year earlier, had called Saudi Arabia a “pariah state.” 

Then the White House extended an olive branch to Iran, currently under siege internally and externally for its oppressive treatment of women. The U.S. would remove its economic sanctions obstructing Iranian oil exports if that country would recommit to restricting its nuclear development activities. 

This disappointed the Saudis which have been engaged in a political and religious power struggle with Iran in the Persian Gulf for decades. 

Then Russia invaded Ukraine in February, becoming the first major oil producer to start a war in Europe. In response, the U.S. has punished Russia in every way except committing American troops and aircraft. America has supplied weapons and money, introduced economic sanctions on Russia, and is leading a G7 attempt to cap Russian oil prices to further starve Russia for cash. 

To lower gasoline prices before the November mid-elections, Washington decided to compete with OPEC+ and U.S. producers by releasing one million barrels per day from America’s Strategic Petroleum Reserve.  

This has suppressed prices and sent the wrong signal to producers, which would ramp up spending if prices kept rising. The U.S. rig count declined slightly in September after rising steadily for two years.  

Monetary policy to tame inflation has caused the U.S. dollar to strengthen, thus reducing headline oil prices. Uncertainly about a recession’s impact on oil demand has also capped prices.  

On October 5 OPEC+ expressed its displeasure with the all the foregoing by cutting output by 2 million barrels per day. Saudi Arabia chose to side with new “pariah state” Russia, instead of its former ally America, a relationship that dates back to WWII. 

With U.S. mid-term elections looming, this is a political stick in the eye to the Biden administration.  

As producers develop their 2023 budgets, no big capital increases are planned. Why? Because the mixed messages have created tremendous uncertainty. 

Those that should be drilling will be very cautious until Washington and Ottawa signal they want more petroleum, not more politics. Western companies don’t, and will never, take direction from OPEC+.  

The world should be worried. Higher oil prices are assured. 

David Yager is an oilfield service executive, oil and gas writer, and energy policy analyst. He is author of  From Miracle to Menace – Alberta, A Carbon Story.  

The unaltered reproduction of this content is free of charge with attribution to Canadian Energy Centre Ltd.

The old saying goes, “No news is good news.” 

But in the 21st century smartphone/internet era, it should read “Good news is no news.”  

Driven by today’s ultra-competitive media, headlines have increasingly become what has been coined “clickbait” –  capture eyeballs with something awful happening to somebody somewhere. 

That’s why you’ll never see, “7.9 Billion People Didn’t Die Yesterday,” or “95% Of Canadians Are Employed.” 

Political news is dominated by the official opposition declaring the governing party incompetent, and vice versa. Images of every forest fire, flood, hurricane or tornado on the planet appears on the world’s 6.3 billion smartphones in seconds. This helped teenager Greta Thunberg become famous when she told us all, “The world is on fire.” 

Several things are indeed going poorly. The pandemic, war in Ukraine, rising inflation and interest rates, and the energy crisis in Europe. When you listen to or watch the news, you can’t help but be concerned, even fearful. 

So we spend increasingly less time counting our blessings. Long forgotten is U.S. President John F. Kennedy’s famous words from his 1961 inaugural address, “Ask not what your country can do for you, but what you can do for your country.” 

These thoughts crystallized during a road trip from Calgary to Lloydminster to participate in the 2022 edition of the Lloydminster Heavy Oil Show. I was a guest speaker at the kickoff banquet September 12.  

Six hours of windshield time is a great way to escape your smartphone. For personal safety, it’s actually essential. 

I’ve made dozens of trips to Lloydminster in my oilfield services career. “Lloyd” is the epicenter of a major heavy oil producing area dating back to the 1940s. The resource is huge, its production significant. 

While Google Maps suggests Calgary drivers take Highway 2 to Edmonton then 16 to Lloydminster, I prefer to go cross-country taking a wide selection of primary and secondary roads. They’re all paved and traffic is light. 

Six hours provides plenty of time to look out the window and truly appreciate where Alberta’s economic prosperity comes from. You see for yourself what makes this province a great place to live, things that don’t exist in a big city. 

Because it is ultimately bountiful resources, free enterprise, advanced technology, hard work and human ingenuity – not genius central planning – that drives our economy. 

Alberta exists in its current form because of massive raw and processed resource production and exports. Fuel. Food. Fertilizer. Petrochemicals. This underscores why market access remains such an important economic and political issue.  

But 58 per cent of Albertans live in four major urban centres: Calgary, Edmonton, Lethbridge and Red Deer. Too many don’t see enough of small-town Alberta, a big reason why rural and urban Albertans think and vote differently. 

There’s lots of road options to Lloyd. I always take a different route there and back. It can include bigger centres like Strathmore, Ponoka, Stettler, Camrose, Drumheller or Wainwright. If you don’t like traffic lights, travel instead through or by Beiseker, Three Hills, Hanna, Castor, Forestburg, Consort, or Trochu. 

What you’ll drive by is a continuous vista of cultivated fields, oil wells, gas wells, batteries, grain elevators, storage vessels, fertilizer and seed distribution facilities, and gas plants. The roads pass hundreds of farmyards full of houses, barns, outbuildings, and a large array of trucks and farming equipment.  

Travel via Hardisty and you’ll see the massive oil storage tanks that comprise the main staging point for Alberta’s petroleum exports. The nearest place with this much oil stored this way is Cushing, Oklahoma. 

This year’s trip was made during a much better harvest than in 2021. Thankfully. The world desperately needs the food. 

Many fields were already cut. The rest contained wheat, canola and other crops waiting to be turned into money. Lots of equipment working the fields, lots of trucks hauling the bounty to the nearest elevator or processing facility. 

Lloydminster was once again buzzing with visible prosperity. Help-wanted signs everywhere. Oilfield equipment coming and going. Stores full, service and support businesses busy.  

We all know about the problems. We’re reminded continuously.  

But when I looked at the faces of the 500 people at the oil show banquet, I was struck by the thought that right now, Lloydminster may be the best place to live in the world. 

Food and fuel in limitless supply. Good jobs for everyone who wants to work. Affordable housing. Opportunity. Recreational facilities. Schools. A hospital shared by Alberta and Saskatchewan.  

And the crowd was universally happy, at least that night. After pandemic lockdowns and years of tough times, their oil show was back for the first time in four years. It was a proud and important symbol of a community and industry that was finally and firmly back on its feet. 

Most of Alberta is feeling that way again. With the recovery in oil and gas and better weather and prices for crops, the people that create the resources the world needs have a smile on their face and a spring in their step. 

Too bad more Canadians don’t visit rural Alberta and learn first-hand where the necessities of life come from. It they did, our country would be heading in a much different direction. 

David Yager is an oilfield service executive, oil and gas writer, and energy policy analyst. He is author of  From Miracle to Menace – Alberta, A Carbon Story.  

The unaltered reproduction of this content is free of charge with attribution to Canadian Energy Centre Ltd.   

One of the best ideas that has gone nowhere is the creation of resource corridors for long-distance transportation infrastructure using routes where land-use and development issues are resolved in advance.

Historically, the path of transportation infrastructure like railroads, highways, power lines and pipelines has been “map and ruler,” a straight line at the lowest cost. Geography like lakes and mountains were the main reasons for route changes.

Fortunately, most of Canada’s long-distance infrastructure was built well before the population grew significantly. The national railroads are a perfect example.

Because the railroad came first, many communities exist only because of it. This spared seeking permission to knock down houses and buildings to run a rail line through town.

Since then, building anything extending beyond the property line of your backyard has become increasingly difficult if not impossible, be it pipelines, power lines, or even roads.

New acronyms emerged. NIMBY, or Not In My Backyard. More obstacles led to BANANA, Build Absolutely Nothing Anywhere Near Anybody.

In Canada, so many projects have been studied, delayed, cancelled or prohibited that we have rightfully earned an international reputation as the country that can’t build anything.

Which is counterintuitive, because long-distance infrastructure is the only reason our nation exists in its current form, and is wealthy enough to obstruct continued development.

A determined creator of infrastructure conflicts has been Canada’s landlocked oil and gas industry; enormous resources with no access to tidewater.

New pipelines to the Pacific and Atlantic Oceans and the Gulf of Mexico have been proposed then opposed by environmentalists, landowners, municipalities, provinces, states and countries.

Billions of dollars have been vaporized on uncompleted projects.

The Liberal federal government alone cannot be blamed when BC, Ontario, Quebec, Montreal, Vancouver, Montana, Minnesota, Nebraska and the U.S. federal government are also opponents.

An innovative solution conceived to resolve the pipeline wars was the concept of resource corridors, pre-arranged right-of-ways over long distances that would be wide enough to accommodate power lines, pipelines, railways and even roads.

Canada has enough empty or underpopulated space that it could avoid the higher concentrations of people through planning, ingenuity and determination. This is an obvious way to avoid most of the conflicts.

Soldiering on in its determination to maintain Canada’s standard of living despite itself is the C2C2C Unity Corridor project, a foundation which describes itself as a “…neutral national entity championing the development of a resilient network of corridors that can link Canada’s economic opportunities, help create more resilient supply chains and support access to global markets.”

Founded in 2018, C2C2C’s idea is to change the channel on development applications from “why” to “what and where” by dealing with economic, land use, environmental and social impact issues in advance.

The first question is basic. Should the country’s population and economy continue to grow? This answer is invariably yes, if for no other reason that even development opponents dare not say no.

Then the next step is what, how and where? This is where everything bogs down.

The C2C2C approach is materially different than the current process whereby a developer wants to undertake a multi-stakeholder project of some sort. The sponsor’s interests, most often commercial, are clear. But the benefits to those affected are not.

What makes C2C2C relevant today is that world events have finally put the need for development before the project itself. The narrative on oil and gas development in particular has finally changed.

Due to a worldwide energy shortage and the invasion of Ukraine by Russia, Finance Minister Chrystia Freeland uttered words not spoken outside of western Canada in years when she said, “We have a lot of energy. I think it is a political responsibility for us as a country to support our allies with energy security. This is a very tough moment for many European countries right now as they shift from their dependence from Russian oil and gas and I think it’s very important for Canada to step up and say, ‘We’re going to help you.’”

This moves the discussion from why to how and where. Which is C2C2C’s purpose.

The organization has an experienced leadership team that includes Jerry Demchuk who has a long career in major oil and gas project development. He is supported by industry veteran Bob Steele, Indigenous leader and energy advocate Chris Sankey, and former B.C. attorney general Bud Smith.

Advisors include Preston Manning, a tireless supporter of responsible but continued resource development.

If and when Canada wakes up and starts doing things again, it will have to be done differently. Most elements of the consultation and engagement process are permanent.

But groups like C2C2C understand this and can provide a resource and catalyst for private sector development proponents which by now may be so discouraged by a decade of “no” that they have given up or moved their business elsewhere.

The world has changed dramatically. Even the Liberal government is saying different things. Resource corridors could be the catalyst to actually getting something done.

Because the world needs Canada’s help.

David Yager is an oilfield service executive, oil and gas writer, and energy policy analyst. He is author of  From Miracle to Menace – Alberta, A Carbon Story.

The unaltered reproduction of this content is free of charge with attribution to Canadian Energy Centre Ltd.