Canada possesses an abundance of oil and natural gas reserves, among which are Alberta’s oil sands. Ensuring these resources continue to spur economic development and provide royalties and tax revenue will require Canadian producers to develop consistent and cohesive policies on energy exports.
Canada also needs to create the infrastructure that will allow it to find the best price for energy in North America and abroad.
That undertaking could include the construction of an oil pipeline to the U.S. Gulf Coast and an increase in both oil and gas transmission capacity to British Columbia ports.
Without ready access to world markets, Canada’s oil and natural gas reserves will be limited largely to the domestic market and to the U.S., where development of shale oil is increasing. Limiting Canada’s energy exports to North America makes it difficult for Canadian producers to ask for the best price, a well-known issue that seriously impacts the country’s national revenue stream.
Establish a world market presence
World markets are also willing to pay more for long-term supplies of liquefied natural gas (LNG) than domestic buyers.
Customers in Asia – including China and Japan – have already indicated a strong desire to do business with Canada. The U.S. is also developing shale gas resources. With a large capacity for domestic consumption, however, our neighbour is not yet in a hurry to become a major LNG exporter. Canada currently has a window of opportunity to establish an international market presence.
Our economy would suffer a significant loss of energy revenue if domestic oil and natural gas can’t be brought to world markets. The Canadian Energy Research Institute estimates that the oil transmission bottleneck alone may be denying the Canadian economy as much as $75-million per day.
Create a stable market
Developing a national strategy for energy exports will create a stable and predictable market for both investors and world consumers.
Even while we work toward a national strategy, the provinces and other stakeholders, including First Nation groups and environmental organizations, can begin to build on common ground. That collaboration would ensure Canada’s energy projects move forward with the best available technology and management systems.
Capital dances away from increased project risk with agility. However, Canada can create a stable business and regulatory climate that balances investment incentive with the need to collect royalties and taxes.
From UN peacekeeping efforts to building a national railroad, Canada is known for delivering on the promise of big projects. If Canada’s energy stakeholders at all levels of the decision-making process develop a sense of energy literacy and ask the tough questions, they will unite to make the right choices for the country’s energy export future.
What are your views on Canada’s energy export future?
Join our discussion on LinkedIn
Geoff Hill is the national leader of the Oil & gas sector. He focuses on operations and innovation strategy. Connect with Geoff on LinkedIn.
Ron Loborec is the national industry leader for Energy & Resources. He brings with him over a decade of energy and resources capability.