The U.S. is considering its options to replace oil imports from Russia amid Moscow’s invasion of Ukraine, but rather than working to fast-track increased oil deliveries from Canada, the Biden administration is reportedly in talks to ease sanctions so the U.S. can buy oil from Venezuela, where the government stands accused of a litany of human rights abuses. 

Canada is the USA’s closest ally, and a world-leading responsible oil developer.  

U.S. sanctions against Venezuelan oil have been in place since 2019 as part of a bid to pressure authoritarian leader Nicolás Maduro to leave power.  

President Biden should look to Canada to improve U.S. energy security instead of negotiating with a hostile government accused of extensive human rights abuses.

Here are the facts.  

Fact: Venezuela’s government is accused of harming its citizens 

Venezuela “is facing a severe humanitarian emergency” under Maduro, according to Human Rights Watch. In late 2021, the International Criminal Court opened an investigation into Venezuela’s possible crimes against humanity. 

“The exodus of Venezuelans fleeing repression and the humanitarian emergency represents the largest migration crisis in recent Latin American history,” Human Rights Watch said in its World Report 2022. 

The Maduro government and its security forces are responsible for offences against their opponents including jail sentences, “forced disappearances,” and executions outside the justice system, Human Rights Watch says. 

Because of poor governance, innocent Venezuelans are suffering. The World Food Programme estimates that one in three Venezuelans is food insecure and in need of assistance. And UNICEF reported 5.8 percent of children screened between January and June 2021 had acute malnutrition, including 1.5 percent with severe acute malnutrition. 

UNICEF also reports that as of September 2021, 73 per cent of Venezuelans didn’t have continuous access to water. 

Fact: Venezuelan oil is worse for the environment and the world 

Venezuela and Canada are both home to vast deposits of heavy and extra-heavy oil – the kind consumed primarily in the massive U.S. Gulf Coast refining cluster. Canada’s Keystone XL pipeline would have provided a direct bullet line there from Alberta.  

Canadian heavy oil has helped replace declining imports from Venezuela amid what IHS Markit in 2020 called “decades of decline and decay.”  

Keystone XL would have been a direct bullet line to the U.S. Gulf Coast from Alberta. But President Biden cancelled the project within hours of taking office based on Canadian oil’s perceived impact on climate change.

There is evidence that Venezuelan oil has a greater footprint, and unlike Canada, little evidence that Venezuela is working to make improvements.  

Limited data is available on emissions per barrel or total emissions from Venezuela’s oil industry. But some insight comes from a respected 2018 study led by researchers at Stanford University.  

They found Venezuela’s emissions per unit of oil to be higher than Canada’s on average (20 grams of CO2 equivalent per MJ of energy compared to about 18 gCO2e/MJ).

Researchers also found that in terms of the range of emissions intensity, the high end for Venezuelan crude was much more than in Canada (about 32 gCO2e/MJ versus about 23gCO2e/MJ). 

They noted noted that Canada was only one of a handful of countries with “higher quality data,” meaning that their estimate for Venezuela is likely incomplete.

The study also uses data from 2015, and significant progress has since been made in Canada to reduce emissions intensity.  

In Canada’s oil sands, where most of the country’s oil is produced, average reported emissions per barrel decreased by 27 per cent since 2013, according to BMO. 

And according to a recent study by consultancy IHS Markit, total oil sands emissions – not just emissions per barrel – are on track to start decreasing in the next five years, even as production continues to grow. 

But as the energy crisis spurred by Russia’s invasion of Ukraine shows us, environmental performance is not the only metric by which oil producers should be measured. Consider environmental, social and governance (ESG) ratings, which account for a variety of metrics including greenhouse gas emissions, water use, Indigenous engagement, worker safety, diversity and inclusion, and regulatory processes. 

Of the world’s largest oil reserve holders, Canada ranks number one in ESG performance while Venezuela ranks 17, according to BMO’s analysis of data from the World Bank Governance Index, Social Progress Index and Yale Environmental Performance Index.  

Fact: The U.S. will require oil imports for decades to come 

Oil, and oil imports, will continue to be critically important to the U.S. long into the future, even as more renewable energy comes online, according to the latest outlook by the U.S. Energy Information Administration (EIA).  

The U.S. imported about 6.5 million barrels of oil per day in 2021, according to EIA data. That is projected to rise to 7.3 million barrels per day in 2030 and 8 million barrels per day in 2040 before dropping modestly to 7.5 million barrels per day in 2050.  

In 2021, more than 50 per cent of U.S. imports of crude oil and petroleum products came from Canada. The recently completed Line 3 Replacement Project helps strengthen this energy security.

The U.S. should look to Canada over other suppliers to supply as much of its imports as possible, as a trusted ally with shared values and goals on reducing greenhouse gas emissions.  

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Russia’s invasion of Ukraine is expected to spark a big shift in global energy markets as nations hunt for responsible suppliers to break their dependence on Russia for both oil and natural gas. 

“Global energy security is under threat, putting the world economy at risk during a fragile stage of the recovery,” Fatih Birol, executive director of the International Energy Agency said on Tuesday as IEA member countries like the United States, Canada and Norway announced a joint release of 60 million barrels of oil from emergency reserves to offset a shortfall in supplies from Russia.  

In the longer term, unbinding Europe from Russian natural gas will be a challenge, given that the region relies on Russia for more than 38 per cent of its supply, according to the EU statistics office. But government actions to stop a major pipeline that Russia is planning to hike natural gas exports signal that the shift is already underway, according to industry analysts.  

“The Ukraine invasion appears to be the last straw for the EU – the suspension of certification of Nord Stream 2 is a clear indicator of the future direction of travel,” says Simon Flowers, chair of global consultancy Wood Mackenzie.  

“The debate about diversifying gas supply away from Russia will only intensify… It is a super bullish signal to LNG developers in the US, Qatar and beyond.” 

That includes Canada, where the prospects for Canada’s LNG industry were already increasing, according to Martin King, Canadian analyst with Houston, TX-based RBN Energy.  

“Global LNG markets have been in overdrive this winter — it seems the world just can’t get enough of the super-cooled natural gas,” King wrote in late February. 

For months, Europe has faced a natural gas crisis, in part because Russia has not been filling its available pipeline capacity to the region, according to the IEA. As a result, Europe has been buying more supplies as LNG on ocean tankers, bidding higher for cargoes that might have gone to Asia otherwise, King says.  

Canada’s west coast is one of the closest and potentially largest sources of LNG for Asian buyers, he says, and the competitive global market is expected to continue well into the next decade.  

“With one major LNG export project already under construction, at least one more awaiting the final go-ahead, and two more serious proposals having emerged last year, Canada’s outlook for additional LNG sales to Asia is clearly bright,” King says. 

The owners of the LNG Canada terminal, currently under construction at Kitimat, B.C., are reportedly considering giving the go-ahead this year for the project’s second phase, doubling capacity by the late 2020s, he says.  

Meanwhile, the smaller Woodfibre LNG project at Squamish, B.C. recently selected its main contractor and is expected to be the next project to get the official green light, “in the coming months.”  

Two First Nations-led LNG projects in B.C. are also gaining momentum. In February, the Cedar LNG project owned 50 per cent by the Haisla Nation filed a key regulatory application and announced a contract for front-end engineering and design.  

And the Ksi Lisims LNG joint venture, which includes the Nisga’a Nation, is moving through the federal and provincial regulatory process.  

On the East Coast, two proposed LNG projects could send Canadian natural gas directly to Europe.  

Calgary-based Pieridae Energy is considering a floating LNG export project off the coast of Nova Scotia, while the B.C.-based First Nations Major Projects Coalition and Miawpukek First Nation are working together on a project called LNG Newfoundland and Labrador.  

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Russian aggression against Ukraine means Keystone XL – the pipeline killed by President Joe Biden on his first day in office – is getting lots of attention from lawmakers in the US.

Over the past week, US leaders have been challenging the year-old decision to cancel the Keystone XL pipeline project, calling for its reinstatement.

Here’s what they have to say:

Congressman Rick W. Allen (GA) led a letter signed by over 40 members of Congress to Biden urging him to include in his State of the Union address a strong commitment to rebuild American energy independence by reopening the Keystone XL pipeline and spurring domestic oil production.

“We urge you to include in your speech a strong commitment to … restore the Keystone XL pipeline. America must once again be energy independent so the world is less reliant on malign actors.”

Senator Steve Daines (MT) said:

“President Biden set us on a dangerous path when he decided to kill the Keystone XL pipeline on day one in office. What’s happening in Russia and Europe is a stark reminder of the need to support American energy development, not hinder it. Energy security is national security, and a global energy dominant America is a safer world. Biden must restart the Keystone XL pipeline now.”

Senator Bill Hagerty (TN) tweeted:

“Their myopic green energy policies—like killing the Keystone XL Pipeline on day one—are what funded Putin’s aggression and got us here in the first place! The Biden Admin still doesn’t get it!”

and

“Biden should be announcing today that we’re reopening the Keystone XL Pipeline, that we’re going to be drilling on federal lands. We need to become energy independent again—not just driving up prices around the world & fueling Vladimir Putin’s war machine.”

Senator James Lankford (OK) tweeted:

“Biden has shutdown the Keystone [XL] pipeline & cut off all leasing on federal lands. He is completely beholden to the far left environmentalists. The power Putin has is because he is suppling oil & gas to the world & the US is not.”

and

“Russia is funding their unprovoked attack on Ukraine through their oil & gas revenue. Biden needs to open up the Keystone [XL] Pipeline & cut off the spigot to Russia’s oil & gas.”

Senator Rick Scott (FL) tweeted:

“Biden hasn’t taken a single step to restore U.S. energy production. His radical Green New Deal policies, like killing Keystone XL, have pushed America to a dangerous dependence on Russian & other foreign energy. That should end today. It’s time to put U.S. energy first again.”

Senator Jon Tester (MT)

A spokesperson for Jon Tester (D-Montana), said:

“Senator Tester was Montana’s leading champion for the Keystone [XL] Pipeline for more than a decade, and he was bitterly disappointed when the project was canceled. Senator Tester will continue to work aggressively to support responsible natural resource development that will create good-paying Montana jobs, secure our energy independence, and defend our national security.”

Senator Roger Wicker (MS) tweeted:

“@POTUS must end his war on American energy. If we do not unleash the strength of this sector by reopening the Keystone [XL] Pipeline, reversing drilling bans, and exiting the Paris Climate Agreement, we will no longer be a net energy exporter. https://www.oxfordeagle.com/2022/02/26/putins-war-on-ukraine-will-affect-us-all/ #WickerReport”

Rep. Michael Burgess (TX) tweeted:

“You’ve got to go back to the very first day of the Biden Administration. When he cancelled the Keystone [XL] Pipeline, and then cut back on the drilling of oil and natural gas and restricted our energy independence. That gave Putin leverage. “

and

“To help aid Americans and our allies right now President Biden must:
Restart the Keystone Pipeline XL
End restrictions on federal land leases
Stop imports of Russian oil
The U.S. is fully capable of being the chief energy exporter for our allies.”

Rep. Mario Diaz-Balart (FL) said:

“The American people should not have to purchase Russian oil. The Keystone XL pipeline, which President Biden halted, would have produced more oil here at home than the U.S. currently imports from Russia.”

Rep. Debbie Lesko (AZ) tweeted:

“In order for our nation to achieve energy independence and dominance, Biden must:
Impose sanctions on Russian oil and gas and lift restrictions on American oil and gas.
Reopen the Keystone XL Pipeline.
End the ban on new oil and gas production on federal land.”

Rep. Barry Moore (AL) tweeted:

“On President Biden’s very first day, he canceled the Keystone XL Pipeline, banned drilling on federal land, and declared war on American energy production.

If President Biden was doing everything in his power to lower gas prices, he would reverse his anti-American oil and gas policies and allow production to increase here in the United States.”

Senator Tim Scott (SC) tweeted:

“American energy independence = American national security.

Six years ago, when the Democrats aborted the Keystone [XL] Pipeline — potentially crippling American oil & gas production — they strengthened Putin’s position.

The administration should immediately reauthorize the Keystone [XL] Pipeline and ensure that Nord Stream 2 never becomes operational.”

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As it continues to wage war on Ukraine, Russia is strengthening its hold on global energy markets with one of the biggest oil and gas projects the world has ever seen.  

State-owned Rosneft says the US$170 billion Vostok oil project will create a “new oil and gas province,” employing 400,000 workers, creating 15 new “industry towns” and building 800 kilometers of new pipelines. 

Rosneft spent a massive US$2.8 billion on the project in 2021 after giving it the go ahead in late 2020, according to the company’s latest public financial results.  

Vostok is expected to export about 600,000 barrels of oil per day by 2024 along the Northern Sea Route that connects Europe to Asia. This will rise to two million barrels per day when the second phase is completed.  

To put that in context, Canada’s entire oil sands industry produces about 3 million barrels per day, and has less than 400,000 barrels per day of direct access to global markets outside the United States. 

World oil demand has rebounded sharply from pandemic lockdowns and is expected to stay strong through 2050, even as more renewable energy sources come online.  

The International Energy Agency (IEA) projects that world oil demand will rise to 103 million barrels per day in 2030, from 96.6 million barrels per day in 2019. In 2050, the world will still consume 103 million barrels per day, according to the IEA’s latest outlook.  

Despite having the world’s third-largest oil reserves and being recognized as a global leader in environmentally and socially responsible production, Canada has limited ability to export oil to hungry markets in Asia and Europe.  

The Trans Mountain Expansion being built to the B.C. coast is a step in the right direction to help reduce global reliance on Russia for oil supply. The project, which will add nearly 600,000 barrels per day to Canada’s global oil export capacity, is now expected to be complete in 2023. 

But that leaves behind millions of barrels per day of opportunity in Canada’s oil sands that is handcuffed by investor uncertainty from federal government policies that discourage oil development.  

In Alberta, oil sands producers have regulatory approval to build at least 2.6 million barrels per day of new production capacity. But it’s not happening. Companies continue to spend less in Canada compared to other places around the world.  

In 2014, Canada was “viewed as a top tier international investment jurisdiction for resource development” and attracted more than 10 per cent of total global spending on oil and gas production, according to the Canadian Association of Petroleum Producers (CAPP).  

In 2022, that is expected to drop to about 6 per cent, representing over $21 billion in lost investment. 

As the world watches the consequences of ceding resource control to a hostile nation, policy makers in Canada and around the world should look to Canada to increase oil and gas exports.  

Canada is the solution to meet growing demand reliably, safely and responsibly, avoiding situations where energy can and will be weaponized. 

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Ukraine’s shooting war has been coming for weeks. Russia politely delayed its attack until the end of China’s winter Olympics to maintain at least one big friend after the missiles were launched. The price of oil has spiked. Supplies and costs of multiple essential commodities are uncertain. 

Canada’s economy is in tough shape. Supply chains are disrupted. Inflation has spiked, interest rate hikes are assured. Government deficits are through the roof. Everybody is learning that Russia is a major supplier of everything the world needs from oil to metals to wheat.  

Where and how this ends is unknown. 

It has been almost 50 years since oil became a geopolitical weapon. That’s when OPEC cut off crude supplies to the US and the European countries that supported Israel during the Arab-Israeli war of 1973/74. Over the next seven years the price would rise by a factor of ten, from $3 to $30.  

This was possible because supply and demand were tight, and the major suppliers of low-cost oil in the Middle East, Africa and South America had very different worldviews than customers in Europe and North America. 

The economic impact was devastating. Skyrocketing oil prices precipitated a recession, high inflation and double-digit interest rates. It was coined “stagflation,” where prices rose and the economy went nowhere. 

Security of supply became a foundation of energy policy. Ottawa and Ontario invested directly in oil sands development. The Liberal government demanded a pipeline from Sarnia to Montreal to guarantee Quebec access to western oil. Gas exports were restricted. The National Energy Program dispensed cash grants to companies for oil exploration.  

It was ten years before oil markets stabilized. Demand was flattened by high prices and a new generation of Japanese fuel-efficient cars. New production from the North Sea, Alaska’s North Slope and Alberta’s oil sands shrank OPEC’s grip on the market. By the mid-1980s oil prices collapsed and didn’t recover for 15 years. 

Early this century oil prices began rising driven by strong growth in Asia and declining non-OPEC supplies. From 2000 to 2008 WTI rose from US$25 to US$140. It dipped briefly during the world financial crisis, then from 2010 to 2014 it averaged US$90. Oil fell sharply in 2015 through 2020 mainly because Canada and the US had added 10 million barrels a day of new production from oil sands and shale oil.  

Without even understanding what they were doing, Canada and the US vastly improved global oil supplies and kept a lid on prices for 14 years. 

But western energy security was doomed. For years North America and Europe have chosen to demonize fossil fuels. Lulled into a false sense of security by low prices and significant supplies without geopolitical risk, the public debate in Canada, US and Europe switched its attention to climate risk.  

Fossil fuels had to go. The future impact of carbon emissions on the climate was so awful that the cost of not replacing fossil fuels tomorrow was much greater than the cost of living without them today. The relentless barrage of climate catastrophe predictions terrified a generation of voters. 

Seeing where the votes were, politicians responded accordingly. Expressing deep concern about the continued use of coal, oil and gas became a badge of honor. And a winner at the ballot box. 

You know the rest. By 2015, killing Northern Gateway was a Liberal campaign pledge. Barack Obama stopped Keystone XL the first time that same year. Attempts to build Energy East were politicized from the start, led by politicians in Ontario and Quebec. Bill C-69 created a politicized consultation process for major projects so unpredictable nobody would ever build anything. Bill C-48 assured no new access for Alberta oil to the north Pacific coast. 

Natural gas was next. Ten years ago, the opportunity for Canada to enter the global LNG market looked fantastic. Only one project is under construction. Quebec denied Europe LNG from its shores last summer. Only a week ago another attack on the Coastal GasLink pipeline caused millions in damages. 

Also contributing was the fossil fuel divestment movement and its various derivatives. It started with oil sands and coal, then expanded to everything through ESG investing. 

As the west virtue-signaled away its energy security, Russia turned into a fossil fuel export powerhouse with Europe as its best customer. Russia supplies Europe with 41 per cent of its natural gas, 29 per cent of its oil, and 47 per cent of its coal.  

Therefore the “war” between Russia, NATO the rest of the world is one in where the energy supplies to Europe must continue. Because it has no options except catastrophe. 

The western response is economic sanctions. Except the ones that really hurt. Like stopping the purchase and delivery of Russian fossil fuels and other key resources to Europe and other buyers. And stopping the continued flow of cash to Russia to pay for them. 

The bad guys are intentionally using their significant oil and gas exports as a geopolitical weapon for nefarious purposes. 

The good guys like Canada have been intentionally withholding new oil and gas supplies and exports to save the world from climate change. 

Canadians must rethink energy policy. The humanitarian approach to global peace and security is to produce more oil and gas, not persecute it. 

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. 

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Russia is invading Ukraine, empowered in part by the world’s reliance on the state for energy supply. 

More than a decade of Canada being handicapped in its ability to get oil and gas to global markets has contributed to the situation, but it’s not too late to change course.  

Canada has the resources, the technology and the commitment to social and environmental excellence to be the world’s energy supplier of choice for the future. 

Fact: Canadian oil could reduce U.S. reliance on Russia    

While U.S. President Joe Biden has spoken out against Russia’s “unprovoked and unjustified attack” on Ukraine, that’s not stopping the flow of oil from Russia to the United States.  

The U.S. is buying nearly 600,000 barrels per day of oil and petroleum products from Russia, according to the latest data from the U.S. Energy Information Administration. Using recent pricing for Russia’s Urals oil benchmark, that means the U.S. is sending more than US$50 million to Moscow every day, while it decries the state’s actions.  

This trade relationship could easily be with Canada instead. The Keystone XL pipeline, which Biden canceled within hours of taking office, would have had capacity to ship 830,000 barrels per day from Western Canada to the U.S. refineries, starting in 2023. That’s well over the current volume imported from Russia.  

The Trans Mountain Expansion being built to the B.C. coast is a step in the right direction to help reduce global reliance on Russia for oil supply. The project, which will add nearly 600,000 barrels per day to Canada’s global oil export capacity, is now expected to be complete in 2023.  

Fact: Canadian gas could reduce Europe’s reliance on Russia 

Russia supplies as much as 40 per cent of Europe’s natural gas. While it’s not possible to secure new supplies to the continent overnight, the invasion is a “super-bullish signal” for global LNG developers to go ahead with new projects, according to Wood Mackenzie chairman Simon Flowers.    

This should include Canada, which has 1.4 trillion cubic feet of natural gas reserves. Calgary-based Pieridae Energy is now considering a floating LNG export project off the coast of Nova Scotia that would specifically target European markets.  

Meanwhile, the B.C.-based First Nations Major Projects Coalition and Miawpukek First Nation on Canada’s East Coast are working together on a project called LNG Newfoundland and Labrador. First LNG shipped to Europe from the $10-billion project is targeted for 2030, meeting growing demand for low-emission natural gas and, potentially, clean hydrogen. 

Fact: Canada is a preferred world oil and gas supplier 

As the world sets net zero targets, oil and gas will still be required for a long time, according to Fatih Birol, head of the International Energy Agency (IEA). He would prefer the supply comes from “good partners” like Canada.   

“Canada has been a cornerstone of global energy markets, a reliable partner, for years,” Birol said in January. “We will still need oil and gas for years to come… I prefer that oil is produced by countries… like Canada who want to reduce the emissions of oil and gas.”  

Canada ranks number one among the world’s top oil reserve holders for environmental, social and governance (ESG) performance, according to BMO Capital Markets. ESG measures a variety of metrics including greenhouse gas emissions, water use, Indigenous engagement, worker safety, diversity and inclusion, and regulatory processes. 

The IEA says that Canadian oil and gas producers are “leveraging their improving environmental, social and governance performance and Canada’s stringent environmental regulations to build a global competitive advantage.” 

Policy makers in Canada and around the world should look to Canada to increase oil and gas exports to help meet growing energy demand reliably, safely and responsibly, avoiding situations where energy can be used as a political weapon.  

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