World energy heavyweight prefers oil and gas from Canada
Producers building a competitive advantage with ESG performance
by Deborah Jaremko
The head of the International Energy Agency says Canada is a preferred global oil and gas supplier and should take steps to ensure it remains so in the decades to come.
IEA executive director Fatih Birol is a big advocate for net zero targets, but he knows that even as the world transforms its energy systems, oil and gas will be around for a long time.
The Paris-based IEA is a world-recognized authority on energy supply, demand and policy.
“Canada has been a cornerstone of global energy markets, a reliable partner, for years,” Birol said.
“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.”
World oil consumption has returned near pre-pandemic levels, and natural gas demand surpassed levels pre-COVID last year, according to IEA data. Consumption of both is expected to continue rising even as more renewable energy sources come online.
In Europe, energy customers are feeling the pain of dealing with an unreliable supplier.
Birol said Europe’s natural gas crisis is in part because it depends on Russia for nearly half its natural gas imports. As a result, Russia’s policies “have a huge impact on the European energy mix.”
Right now, Russia has unused capacity to send the equivalent of a full LNG vessel every day to help reduce natural gas prices in Europe, amid a standoff between Moscow and the West over Ukraine, Birol told reporters last week.
“[The] world needs reliable partners,” he said. Canada’s first LNG exports are expected in 2025 and forecast to rise steadily thereafter, the IEA noted in its report.
Canada is the world’s fourth-largest producer of oil and natural gas and home to the third-largest oil reserves, which “creates employment for Canadians and secure and reliable oil and gas for both domestic and global markets,” the IEA said.
Remaining competitive in global oil and gas markets – and ensuring the sector remains a major driver of the Canadian economy beyond 2050 – requires emissions reductions, the IEA said, praising work that has been done already.
Canada is not only stable and reliable, but its LNG supply will also be cleaner than competitors, the IEA said.
The LNG Canada project that is under construction in B.C. is expected to have the lowest carbon emissions intensity of any large LNG facility currently operating in the world, at 60 per cent lower than the global average.
Other proposed LNG projects in Canada plan to use clean, renewable hydroelectricity to power operations, resulting in emissions profiles up to 90 per cent lower than global competitors, the IEA said.
Analysts praised the oil and gas industry’s “strong track record” of reducing emissions intensity, in the oil sands by 32 per cent since 1990 and by 13 per cent for natural gas production since 2010. A further reduction of up to 27 per cent is expected in the oil sands by 2030.
The success is in part because of large investments in clean technology and environmental protection, the IEA said.
Oil and gas companies in Canada together spend an average of $1 billion per year on energy cleantech, in addition to billions in environmental protection.
In 2018, oil and gas companies also invested $3.6 billion in environmental protection initiatives – by far the largest environmental protection spend of any industry in the country, the IEA said.
“Canadian oil and natural gas producers are leveraging their improving environmental, social and governance performance and Canada’s stringent environmental regulations to build a global competitive advantage” as interest in cleaner fuels and environmental sustainability grows.