There was a time, not long ago, when Canada was best known internationally for its wide-open spaces, wheat and hockey. Energy is rapidly changing that. While Canada’s substantial energy assets are undisputed, there remains much to do if Canada is to fully realize its potential to become an energy superpower.
ENERGY BUILDERS
by Randall Anthony Mang
Canada’s is on its way to becoming a world-leading energy provider, but proponents of that movement say Canada’s formidable energy assets alone are not enough for Canada to realize its potential.
During a recent speech to the U.S. Chamber of Commerce in Britain, Prime Minister Harper referred to Canada as an energy “superpower” and specifically to the oil sands as “an enterprise of epic proportions, akin to the building of the pyramids or China’s Great Wall. Only bigger.”
Jason Langrish, a former Canadian government trade and investment promoter in Brussels, is now president of The Energy Roundtable – a group that hosts executivelevel meetings in Canada and abroad designed to bring executives together to help shape policy and stimulate investment in Canada’s energy sector.
“Energy is Canada’s ‘ticket’ in the world. This makes us a player,” says Mr. Langrish, who says among Canada’s assets, “We have the resources; we are peaceful, politically stable; and we have prosperous neighbour who buys the lion’s share of our products.”
Peter Krenkel, president of the TSX Group-owned Natural Gas Exchange, says, “If you look at energy in general – crude oil, natural gas, electricity, nuclear, coal and alternatives – investment is required on all fronts.”
Canada’s biggest energy play – Alberta’s oil sands – is also arguably our best model for how to develop our energy assets.
There, proven reserves of more than 170 billion barrels of oil sands crude have made Canada the world's second-biggest oil nation after Saudi Arabia. But that’s only part of the success story.
Ken Smith, managing partner of Secor Consulting, says, “The oil sands serves as a good example of the kind of foresight we need in the development of our industries in general, and especially our resource industries.”
He notes that companies such as Imperial Oil began patiently investing in the oil sands “decades ago, when the economics weren’t necessarily there.”
It wasn’t until recent years, however, when the federal and Alberta governments began allowing companies to recover their capital and operating costs before being charged large royalties, and the price of oil began to soar, that oil sands development kicked into high gear.
Mr. Langrish notes today, “The oil sands is a global project. It’s not just Canadians or even American firms. Europeans are investing heavily as well: Royal Dutch Shell, BP, Total of France, and large banks like Société Générale and companies such as ThyssenKrupp AG are involved.”
Craig Spurn, co-chair of the Energy Practice Group at Blake, Cassels and Graydon LLP in Calgary, is among the legal professionals facilitating foreign investment.
In recent months, Blakes has led major transactions including Kinder Morgan’s $5.6-billion acquisition of Terasen Gas, and the Chinese-state-owned Sinopec Group’s $105-million investment in a 40 per cent interest in the Northern Lights Project and its related entity Synenco Energy, a partner in an estimated $4.5-billion oil sands upgrader project. Sinopec is also fuelling a major pipeline project to ship Alberta oil to Asia through Prince Rupert.
While Mr. Spurn says a host of challenges (environmental, labour shortages, infrastructure, regulatory and others) must be addressed for the oil sands to achieve its longerterm production targets, “Overcoming the challenges is in the interests of a lot of different parties, including Canada. It’s very viable given the size of the prize.”
Will Canada’s other energy sectors get the support they need to grow? Part of the driver may be concern for the environment Mr. Langrish says, “The evolution on energy is about using energy efficiently and in a sustainable way – to cut costs, address environmental concerns, make the most of existing resources through innovation.”
This is promising news for clean energy systems – from clean coal technologies and nuclear to wind power and other renewables.
Mr. Krenkel says, “That’s the area where people are looking to invest: clean and renewable technologies like biomass and bio-diesel that have minimal impact on the environment.”
He notes while government incentives help, “Higher oil prices are perhaps the greatest incentive yet to boost interest in alternative energy.”
Mr. Smith believes Canada is also well-positioned to capitalize on a global renaissance for nuclear energy, but has concerns. “We have a world-class skill base in the research and development of nuclear reactors. But we’ve been managing this as a protected Crown operation.
“The concern I have is can we, will we, parlay that reputation and skill into the global nuclear industry as it grows to a scale many times its current size? We need to attract capital, skills, partnerships that will allow us to participate in the nuclear renaissance globally. That’s hard to do with a protected, subsidized Crown corporation.”
Mr. Langrish says Canada’s emerging geopolitical significance in terms of energy security is leading to deepening policy considerations. “Now, policy makers and utilities need to review options within an international context. Canada needs to be seen as a choice location for investors who have a long view on energy and its returns.”
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Associations and Partners also appearing in this report:
...Bruce Power’s lease of the Bruce Nuclear Complex from Ontario Power Generation.
...Direct Energy’s experience operating in North America’s diverse regulatory environments...
The Canadian Wind Energy Institute (CanWEI) will open at North Cape, Prince Edward Island...
...recently launched its Innovative Canadian Oil Sands Manufacturing Opportunities initiative
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