In a world where most of our oil is produced by national oil companies (NOCs), we need to remind ourselves that it absolutely does matter where you source your energy from.
A recent article by The Economist highlights several important facts that should concern any nation looking to secure energy supplies amid one of the world’s worst energy crises. A quick summary from the Economist:
> NOCs hold roughly two-thirds of the world’s oil reserves
> NOCs produce three-fifths of the world’s crude
> NOCs produce half of global natural gas supplies
> Of the world’s top 15 oil and natural gas producers in 2021, two-thirds are NOCs
NOCs ownership of global energy reserves and production is in stark contrast to international energy majors. Multinationals hold and produce just over one-tenth of the world’s oil and natural gas.
But why exactly should we care who is responsible for supplying the world’s oil and gas?
Look no further than the Oil Embargos of the 1970s, or more recently, the 2022 war in Ukraine if you need a reminder of what happens when NOCs control the bulk of energy production and exports and choose to turn off the taps.
Sadly, since 2010 when the now-defunct Keystone XL pipeline between Canada and the U.S. was initially delayed, global oil demand has increased by well over 10 million barrels per day. The project would have allowed more sustainably produced Canadian oil to flow into American markets, displacing less responsible supplies from NOCs abroad.
NOCs & Climate Action Initiatives
Energy security isn’t the only issue with letting NOCs dominate global energy markets.
According to Kavita Kadhav of Wood Mackenzie, state-run energy companies allocate less than 5% of their capital spending to the energy transition, versus 15% on average for North American and European firms.
Additionally, between 2005 and 2020, developing-world NOCs filed much fewer patent applications for green tech and innovation than their international counterparts, according to Amy Myers Jaffe and colleagues at Tufts University’s Climate Policy Lab.
These facts alone should motivate any responsible global energy producer to want to do more. After all, the oil and gas market is an extremely beneficial business, worth about $6 trillion dollars in 2021 with projections that it will grow to nearly $7 trillion in 2022 .
Name a Western country that wouldn’t want to create more domestic prosperity while helping in the global fight against climate change. North American and European energy producers are more dedicated to taking climate action through investment and green innovation; therefore, naturally, they should be the go-to suppliers of choice for the world’s energy needs.
Additionally, the International Energy Agency’s latest World Energy Outlook 2021 report shows that global oil demand is projected to grow for decades yet if governments stick to their current policies. Meanwhile, Shell’s latest LNG outlook predicts global demand to grow 90% by 2040.
Putting more energy production into the hands of NOCs that don’t perform as well as North American and European producers on Environmental, Social and Governance (ESG) metrics does absolutely nothing for the climate. In fact, the West is abdicating responsibility as stable, reliable and sustainable energy producers by letting NOCs dominate international markets.
As we’ve seen repeatedly - like with the Keystone XL pipeline - shutting in responsible Canadian energy production does nothing to keep a single molecule of oil and natural gas in the ground. All this does is cede global market share to less transparent producers who often have little to no regard for the values we Canadians hold dear.
Canada's Record on Climate Action
A year ago, the Saudi Prince of oil – Prince Abdulaziz bin Salman – vowed his country would be “…the last man standing, and every molecule of hydrocarbon will come out,” via reporting by Bloomberg .
If only Canada could take the same stance in recognition of our energy sector’s world-class protections for human rights and the environment – the same which cannot be said for most global NOCs.
Canada is serious about climate action through emissions reductions and the deployment of carbon capture and storage technologies. We are also a global leader in cleantech and innovation, helping our natural resource producers reduce environmental impacts even further.
Some juicy climate action initiatives in Canadian energy :
> Of the world’s top oil and natural gas exporters, Canada ranks consistently high - if not the highest - on the following ESG indices:
- Democracy Index
- Global Peace Index
- Social Progress Index
- Rule of Law Index
- Corruptions Perception Index
- Women, Peace, Security Index
- Green Future Index
- Global Press Freedom Index
- Environmental Performance Index
- Sustainable Development Index
- Green Future Index
> In 2019, Canada was responsible for just 0.67% of the 150 billion cubic metres of gas flared by energy companies around the world
> Canada’s oil sands emissions intensity has decreased 44% since 1995, with the potential for another 30% of reductions with planned innovations
> Canada is home to about 15% of major carbon capture, storage and utilization projects with just 0.5% of the global population
> If the rest of the world followed minimal Canadian gas flaring standards, total GHG emissions from every barrel produced would decrease by 23%
Canada Should Be a Choice Oil & Gas Supplier
Canada is fully invested in a lower carbon future, unlike many NOCs. Also, our country is a bastion of democracy and its underlying principles such as the rule of law, freedom, and equality for all.
Who wouldn't support such values? Anti-Canadian energy activists, it seems, who want to restrict sustainably produced Canadian energy from reaching global markets where it can displace production from other less responsible countries.
So, the question remains: where do you want to source your energy from? Would it be from stable and responsible producers like Canada, or NOCs with less transparency and much weaker protections for human rights and the environment?
The choice couldn’t be more clear.
It’s time we start expediting the development of Canada’s energy export infrastructure to benefit our families, global energy security and the climate.
Global oil and gas demand is projected to grow for many years yet, and Canada should do everything it can to reap the benefits of becoming a major global supplier for countries apart from the U.S.
1 - The Economist - State-run oil giants will make or break the energy transition, Date Accessed: September 2022 (https://www.economist.com/business/2022/07/25/state-run-oil-giants-will-make-or-break-the-energy-transition)
2 - Yahoo - Worldwide Oil and Gas Investment to 2031 - Identify Growth Segments for Investment, Date Accessed: September 2022 (https://ca.movies.yahoo.com/worldwide-oil-gas-industry-2031-091300798.html)
3 – BNN Bloomberg – The Saudi Price of oil vows to drill ‘every last molecule’, Date Accessed: August 8th, 2022 (https://www.bnnbloomberg.ca/the-saudi-prince-of-oil-vows-to-drill-every-last-molecule-1.1631633)
4 - Canada Action - Oil and Gas in Canada: 75+ Facts, Date Accessed: September 2022 (https://www.canadaaction.ca/oil-natural-gas-facts)
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