If Canada put its pedal to the metal, it could displace up to 59% of Russian natural gas exports and up to 46% of its oil sales over the next decade says a new report by SecondStreet.org.
The survey comes when Europe – Russia’s largest oil and gas export destination – and other nations abroad are looking to find alternative energy sources amidst the war in Ukraine. It examines how much Russian energy exports Canada could displace over the following time frames:
- Short-term – 1 year
- Medium-term – 3 to 5 years
- Long-term – 7 to 10 years
A major underlying assumption behind the survey is that Canada prioritizes developing and exporting more energy resources. That would include building the necessary infrastructure to ship those resources to global markets.
According to SecondStreet, several variables are used to determine its findings including feedback from experts, global demand for oil and natural gas, global demand for Russian energy, Canadian government regulatory policies, and investor confidence in Canada to name a few.
Report Highlights
> Over the short-term, there isn’t much Canada can do to displace Russia’s global energy market share due to the lack of pipeline capacity and the time it takes for new energy projects to undergo construction. Therefore, Canada could offset just 4% of Russian natural gas exports and 6% of oil exports over one year.
> In the medium-term, Canada could displace 18% of the nation’s natural gas and 19% of its crude oil on global markets.
> Over the next 7 to 10 years, Canada could offset up to 59% of Russia’s natural gas exports and up to 46% of its oil exports annually.
SecondStreet notes that policymakers should consider the world is not facing a short-term problem. Therefore, it would be unwise not to move towards reducing Russia’s oil and gas revenues in the now to help prevent future conflicts like Ukraine.
According to the International Energy Agency (IEA), petroleum comprised approximately 45% of Russia’s federal budget in 2021. Therefore, policymakers would be wise to cut off those funds now, revenues which have underpinned Russia's war efforts.
Methodology
From August to October 2022, SecondStreet approached several experts and asked them to estimate what volumes of Russian oil and natural gas Canada could displace over the short to long-term.
Respondents were told to assume that Canada made it a national priority to develop its oil and gas resources and increase exports. That would include exploring and developing new reserves, approving new pipelines, liquefied natural gas (LNG) export facilities, and fast-tracking these projects.
Municipal, provincial and federal governments would be expected to reduce legislative barriers, shorten the regulatory review processes, and build on past abandoned applications rather than starting anew.
Respondents were free to take into account indirect offsets – i.e. Canadian oil and natural gas exports shipped to global markets through U.S. ports.
Additionally, participants were asked to assume that governments would uphold the law if anti-Canadian energy activists attempted to block or delay projects and that these new developments would be private sector-led.
Findings
The charts below show varying results over the short to long term. According to SecondStreet, the significant variances in results may be related to investor confidence in Canada, where some survey respondents feel more confident in the longevity of the industry -- and others not so much.
The World Needs More Canadian Energy
SecondStreet’s survey suggests that Canada could play a significant role in helping displace Russian energy on global markets, especially over the medium to long term (5 to 10 years). Ultimately, this would help decrease available funds for the Russian government to use for future conflicts while benefitting Canadian families and global energy security.
Canada is one of the most stable and reliable energy exporters on the planet. It is also one of the last major democratic producers which supports and promotes principles such as human rights and gender equality worldwide.
Global oil and gas demand is growing. Who would you choose to get your energy from?
"The global economy should avoid a recession next year but the worst #energycrisis since the 1970s will trigger a sharp slowdown, with Europe hit hardest."
— Canada Action (@CanadaAction) November 26, 2022
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