'Canada has a moment right now, but it’s important that we get this right,' says Jon McKenzie, CEO of Cenovus Energy.Fred Lum/The Globe and Mail
Oil and gas chief executives are optimistic that a majority government in Ottawa will help accelerate the changes they want to see on energy policies. Movement is essential, they say, so that Canada can meet its full potential as a trusted supplier as the war in Iran continues to upend energy markets.
The Middle East conflict has shaken the structure of global oil and gas markets, as countries that face a severe supply crunch look for stable supplies and try to increase their energy independence. That has many governments realizing just how exposed they are to an energy shock and taking a serious look at energy security.
Energy watchers say the resulting opportunities for Canadian fossil fuel companies are significant.
On Tuesday, Prime Minister Mark Carney said the conflict has reinforced the importance of both energy security and the “the overall energy transition,” including a massive carbon capture project planned for Alberta’s oil sands.
That in turn has underscored the significance of the energy agreement signed last year between Ottawa and Alberta, he said, as the two work to find common ground on various policies including carbon pricing. He added there has been “good progress” made in those negotiations.
“We’re not just advancing specific projects, but we’re setting up the framework for major investment in Alberta and across the country for decades to come,” Mr. Carney said.
With the global energy crisis showing no signs of letting up, roughly 300 oil-patch decision-makers, industry experts and investors converged on Toronto at the BMO Canadian Association of Petroleum Producers Energy Symposium this week. They spoke with The Globe and Mail between sessions.
Canada well-positioned for energy exports amid Iran turmoil, Scotiabank CEO says
Do you think having a majority government in Ottawa will change the tone and pace of change around energy policy?
Brian Schmidt, CEO of Tamarack Valley Energy: “I would think you would find today, among my peers, that most are happy we have a majority government. Because regardless of who that is, it’s a really important element to move past some of these issues facing the sector. It’s going to require tough decisions, and you don’t want to be looking over your back all the time.”
Lisa Baiton, CEO of Canadian Association of Petroleum Producers: “We have appreciated the change in tenor and approach over this past year. Federally, the focus is on mission rather than ideology, and that makes for much more pragmatic decision-making. I’m hoping with the majority government that we can move faster.”
Sky-high prices for physical barrels reveals the real turmoil in oil markets
Even as that tone has changed, though, there is still no agreement on items in the Alberta-Ottawa energy MOU. Does that worry you?
Jon McKenzie, CEO of Cenovus: “Canada has a moment right now, but it’s important that we get this right – it shouldn’t be a schedule-driven process. The timelines that were put out were intended to drive urgency in the negotiation, but if we are going to do carbon capture and sequestration, we need the right set of financial supports. If we are going to build a pipeline to the West Coast, we need the right policy reform to make sure that industry can backstop that pipeline. We have an opportunity to unlock growth in this country and we need to get it right.”
What do you mean when you say Canada “has a moment?”
Mr. McKenzie: “There’s a growing recognition that Canada is not just a reliable producer with long-life reserves of the energy that the world needs and it’s very responsibly produced. [Additional production] should come from Canada and I think that’s what the world is looking for. We just need to find a way to get ourselves unstuck as a country.”
Analysis: Iran ceasefire reveals a world transformed
What do you think has changed in a practical sense since the war began on Feb. 28?
Chris Carlsen, CEO of Birchcliff: “The reality is it has done something similar to what tariffs did – created an impetus to act. When dealing with tariffs, all of a sudden we got our national pride figured out and we’re nation-building. Now we need to diversify our customer base. Allies are reaching out to us directly as an industry, as a company, asking for propane, asking for butane, asking for natural gas, and we have nothing to provide. There is a tailwind here to say, ‘Hey, maybe Qatar LNG is not as secure and reliable and everything else as a plethora – some from Canada, some from the Gulf Coast, some from Australia, some from Qatar.’ You’re seeing the buyers think about that a lot more.”
We’ve seen some wild energy prices as a result of the war. Are companies are re-examining their budgets?
Mr. Carlsen: “We’re not changing our capital spending plans. We’re getting the benefits today, but the futures curve is $70, not $100. So even though we want to act today and take advantage of $100 oil, the reality is we need to get the regulatory environment right so that if it’s a $70 world when these projects come on five to 10 years from now, they make money.”
Randy Ollenberger, BMO oil and gas analyst: “What we’ve heard out of Canadian companies is that there won’t be any changes to their budgets, that they’ll use this to pay down debt. If they’ve already paid down their debt, they’ll return it to shareholders. We have heard some U.S. companies talk about marginally increasing their capital budgets, but I don’t think we’re going to see any big shifts in behaviour.”
Interviews were edited and condensed for length.