Page 10 - NorthAmOil Week 34

NorthAmOil COMMENTARY NorthAmOil

curtailed output, so crude-by-rail shipments will month, and if they do not, this would trigger a
likely pick up. However, there have been warn- snap election. A poll this week suggested that if it
ings that some production could remain perma- does come down to a snap election, the Liberals
nently offline. Indeed, various bodies are now would win, prompting speculation that Trudeau
releasing production outlooks for both the short may be trying to force this outcome in an attempt
and longer term. to regain a parliamentary majority.
Recently, the CER forecast that the Cana- Trudeau has sought – not always successfully
da’s oil production would average 4.38mn bpd – to balance resource development with climate
for the whole of 2020, down 6.6% year on year. change mitigation efforts. And indeed, he is
(See NorthAmOil Week 33) Since then, other now touting a “green recovery” from COVID-
forecasts have also emerged, with the Canadian 19. Assuming he survives – with or without a
Energy Research Institute (CERI) releasing two majority – oil sands producers in particular will
separate outlooks for oil sands and conventional be fighting to position themselves as part of the
production last week. In the oil sands, which solution rather than the problem.
account for the bulk of Canada’s crude output, This goes hand in hand with winning over
CERI projects that output will fall this year but investors that do not appear to have been swayed
subsequently rebound to grow for the next 19 by greenhouse gas (GHG) reduction initiatives Producers cannot
years. Under its best-case scenario, CERI sees in the oil sands and broader industry thus far.
oil sands supply growing from 3.1mn bpd today “One of the things that I have seen is that a lot discount the role
to 4.7mn bpd in 2039. Under its slowest growth of the investments that have been made over the that investor
scenario, the institute projects that it will peak at years don’t necessarily get the proper recognition
4.3mn bpd by 2039. in the capital markets, and a lot of that innova- and political
tion is capital intensive,” an EY climate change
Public image limited and sustainability services practice leader, sentiment will
The rate at which production recovers and Meghan Harris-Ngae, was quoted by CBC News
resumes growing depends in large part on how as saying last week. play.
crude prices behave, but producers cannot dis- Such innovation includes Imperial Oil and
count the role that investor and political senti- other energy companies developing new tech-
ment will play. nology to use solvents in oil sands produc-
The election of O’Toole as Conservative tion as a way of reducing both costs and GHG
leader has been welcomed by Alberta Premier emissions. And recently it emerged that Husky
Jason Kenney – also a Conservative and a strong Energy is now linking its GHG emissions to
ally of the oil industry. It appears likely that the compensation as part of a new plan to reduce
Conservatives will clash with the minority Lib- GHG emissions by 25% over the next five years.
eral government over the federal carbon tax, and Critics have argued that such initiatives
that this could be a significant battleground in should have been adopted years ago and may
any future election. Indeed, the Liberals need now be coming too late. But late adoption may be
to survive an upcoming confidence vote next better than not adopting such measures at all.™

P10 www. NEWSBASE .com Week 34 27•August•2020