Mar 8, 2022
Energy policy handcuffs Canada amid Russian oil ban: Ex-TransCanada CEO
Development of oil sands and pipelines have been impeded by misguided energy policy: Hal Kvisle
As more and more countries shun Russian oil, it might seem like a big opportunity for Canada’s energy industry to sell more of its crude to the world, but an industry veteran says it’s not as easy as it sounds.
In fact, it could take years.
Hal Kvisle, a former chief executive of TransCanada Corp. and Talisman Energy Inc., said Canada could increase its crude production in certain high-productivity oil basins in Alberta and Saskatchewan, but “not by much.”
“The reality is Canada could add three or four million barrels a day if we were called upon, but it takes more than five years lead time to do projects like that,” he said in an interview Tuesday.
“It's the tragedy of North American energy policy over the last 10 or 15 years,” added Kvisle, who currently serves as chair of Arc Resources Ltd.
An increasing number of countries are banning imports of Russian oil to put pressure on President Vladimir Putin after he directed an invasion of Ukraine. The United States and United Kingdom announced plans Tuesday to wind down their exposure to Russian fossil fuels over the coming weeks and months.
But that will leave these countries on the hunt for replacement barrels, which will likely put further strain on global crude inventories and push oil prices even higher. On Tuesday, American benchmark crude West Texas Intermediate rose another 3.6 per cent to settle at US$123.70 per barrel, its highest since August 2008.
Kvisle said Canada has the resources, but energy policies have hampered development of the oil sands and the infrastructure needed to transport crude to market.
“Even to add the first half million barrels a day would take five years because of regulatory processes,” he said. “These things take a long time.”
Alberta Premier Jason Kenney has taken the opportunity to raise the idea of reviving TC Energy Corp.’s Keystone XL pipeline, which was effectively killed by U.S. President Biden over environmental concerns, as a way to get more oil to the U.S. market.
However, in an emailed statement late Tuesday, a TC Energy spokesperson confirmed the Keystone XL pipeline project was terminated and “will not proceed.”
Kvisle said he’s not optimistic that the Canadian and American governments will quickly change their tune on big oil because of pressure from environmental groups.
“I think even politicians who know that we need to take some urgent steps are going to be restrained in doing what they understand we need to do because of their political constituencies,” he said.
When it comes to energy policy, Kvisle said so much of the onus of reducing greenhouse gas emissions has been put on energy companies and not enough has been focused on reducing demand for hydrocarbons.
“Until consumers have other alternatives, other ways of getting around, or other ways of heating their homes effectively - until we address the demand on the consumer side - we're not really going to change the balance,” he said.
“Given the long lead time it's going to take to electrify almost everything we do in the economy…I'm not talking five to 10 years. We've actually been badly hurt by this tendency to set five- to 10-year objectives that we never meet and not spend enough time thinking about what we got to do to make an effective transition over 25 or 30 years.”