OPEC's Latest Oil Production Cuts Show Why the West Must Look to Canadian Energy

OPEC's stranglehold on global energy markets isn't something the West should take lightly.

Skyrocketing energy prices are making life unaffordable for tens of millions of people in Europe, the U.S. and other nations across the world. Meanwhile, entire European industries, for example, are at threat of being shuttered permanently due to a lack of affordable natural gas supplies.

And what is OPEC's response? To reduce supplies even further and hope that the dollar notes roll in.

It turns out that energy shortages have real-world consequences such as food insecurity, financial insolvency, and in the worst case, even death. Additionally, as the war in Ukraine rages on, we are reminded of the abhorrent human rights violations being supported financially by autocratic energy dollars.

When will we wake up and set our sights on more stable, reliable and responsible sources of supply for the natural resources we need? How much longer are we going to put our energy futures in the hands of autocratic regimes that can cut supplies at a whim, and cause mass geopolitical instability just as quickly?

Home to vast oil and gas reserves, Canada is an ideal energy producer to fill in for OPEC+ production.

Canada is already the world's fourth-largest oil exporter and sixth-largest for natural gas. But we can do more, and must, for the sake of domestic prosperity, energy security and the global climate.

Untapped energy reserves in Canada are abundant.

Straddling the British Columbia-Alberta border lies the Montney Formation, a trillion-dollar gas field the size of New Brunswick and Nova Scotia combined ^[3]. It is larger than the Marcellus field, which has underpinned the U.S.'s shale gas revolution.

Today, the Montney is the primary supply source to west coast liquefied natural gas (LNG) export facilities. Still, we have come nowhere close to tapping into its true potential as a reliable supply source for the transition fuel.

Quebec is yet another Canadian province with vast untapped natural gas reserves. The province spends about $2 billion a year importing natural gas from Western Canada and the U.S., supply that it could replace by developing its own reserves in the St. Lawrence Lowlands area and other parts of the province ^[4]. These reserves have also been touted as potential supply sources for east coast LNG projects to serve European demand.

Now, if only Canada could see a "business case" for these projects, like dozens of other nations are.

Newfoundland & Labrador is yet another Canadian region with huge untapped energy reserves. A new study commissioned by the province has found that two offshore basins may host 68 trillion cubic feet of gas and 38 billion barrels of oil ^[5].

Natural Resources Minister Jonathan Wilkinson has suggested that low-carbon-intensive production at projects like the recently approved Bay Du Nord will be a go-to choice for future energy supplies. So then, we should develop more of these world-class offshore plays, should we not?

And of course, there is Alberta's oil sands, the third-largest proven oil reserves in the world. The oil sands are a stable and reliable source of supply of heavy-grade crudes to the U.S. – and soon, likely to California and parts of Asia as well via the Trans Mountain Expansion.

Upon inauguration to office, President Joe Biden cancelled the Keystone XL pipeline, which would have boosted oil sands supplies to U.S. Midwest and Gulf Coast refineries by 830,000 barrels per day. Before that, multi-billion dollar projects that would expand oil sands production capacity - like the $20 billion Frontier mine - were also cancelled due to "environmental" concerns.

Yet, the Biden administration is now looking to lift sanctions on Venezuela to boost global oil supplies, in return for a promise to hold free and fair elections in 2024 ^[7]. The agreement would also require dictator Maduro to re-open talks with political opponents in "good faith."

Have we not learned that we cannot trust OPEC+ producers?

Are we going to continue to jump from one dictator to another in search of more oil and gas supplies while ignoring the potential consequences of financially supporting such ruthless regimes?

Or, will we finally look north to Canada, a stable and responsible global energy exporter?

It seems not many people are aware of the incredible strides the oil sands sector has made in reducing GHG emissions and environmental impacts. With continued investments in research and development, cleantech and innovation, and carbon capture and storage, the oil sands may produce barrels with GHG intensities below the global average in the near future, but that's a whole other story on its own.

It's clear that Canada partially has the reserves to fill in for less stable and reliable producers globally. But it will take a strong will and resolve by Canadians and all levels of government to develop these resources.

Over the past several years, Canada hasn't had the best track record in getting energy infrastructure built. As of 2020, approximately $150 billion of energy projects had been cancelled due to lengthy regulatory delays, staunch environmentalist opposition, and an overall lacklustre investment climate that has investors wondering if they'll ever be able to build new projects ^[6].

However, with resource security now in the limelight due to the war in Ukraine, perhaps Canadians will now have the resolve to offer a better alternative to energy supplies from autocratic regimes who don't care about human rights and the environment as much as we do.

Global demand for oil and natural gas is growing; as long as the world needs these resources – and it will for decades to come – responsible producers like Canada should be go-to suppliers of choice. Let's face it; the global community has spent trillions of dollars on renewables over the past several years, reducing total global energy demand from fossil fuels by only a few percentage points.

It's not that we don't need renewables. We do. But we need to be more realistic about global energy systems and how today more than 80% of worldwide demand is still met by coal, oil and natural gas. The transition away from fossil fuels to lower carbon energy will take much longer than we all anticipate, as proven by the world's return to coal amid drastic supply shortages.

The truth is that we need an all of the above solution to the global energy crisis, which now some analysts are saying may last for years. That includes supporting the development of Canadian oil and gas, solar, wind, geothermal, hydro, biofuels, hydrogen, and everything in between.

OPEC's latest oil production cuts amid the world's worst-ever modern energy crisis should indicate it is time the West sets its sights on Canadian energy and recognize the role it can play in reducing our reliance on despotic energy producers.

But that's easier said than done. It's just as crucial that Canadian governments recognize the benefits of becoming even more of an energy superpower and work together to make that happen. National prosperity, global energy security and the climate may very well depend on it.

5 Reasons Why #OilAndGas #Divestment in #Canada is Not Good for Canadians or the Global Environment https://t.co/gS80NNg2A7

— Oil Sands Action (@OilsandsAction) September 26, 2022

SOURCES:

_{1 – CNBC – OPEC+ to cut oil production by 2 million barrels per day to shore up prices, defying U.S. pressure, Date Accessed: October 5th, 2022 (https://www.cnbc.com/2022/10/05/oil-opec-imposes-deep-production-cuts-in-a-bid-to-shore-up-prices.html)}

_{2 – The Guardian – Biden 'disappointed' with Opec+ decision to slash oil production, White House says – live, Date Accessed: October 5th, 2022 (https://www.theguardian.com/us-news/live/2022/oct/05/biden-desantis-hurricane-ian-damage-florida-trump-miami-politics-latest-updates)}

_{3 – Financial Post – Opinion: Unleash the Montney: Canada's world-class gas field is waiting to be tapped, Date Accessed: October 5th, 2022 (https://financialpost.com/opinion/opinion-unleash-the-montney-canadas-world-class-gas-field-is-waiting-to-be-tapped)}

_{4 – EnergyNow – Quebec's Green Opportunity – Why Does Quebec Spend Billions Each Year Importing Natural Gas?, Date Accessed: October 5th, 2022 (https://energynow.ca/2020/06/quebecs-green-opportunity-why-does-quebec-spend-billions-each-year-importing-natural-gas-secondstreet-org/)}

_{5 – Upstream Online – Two Canada basins may host 68 trillion cubic feet of gas and 38 billion barrels of oil, Date Accessed: October 5th, 2022 (https://www.upstreamonline.com/exploration/two-canada-basins-may-host-68-trillion-cubic-feet-of-gas-and-38-billion-barrels-of-oil/2-1-1325675)}

_{6 – Financial Post - Scrapped: How nearly $150 billion worth of energy projects have been shelved in Canada, Date Accessed: October 5th, 2022 (https://financialpost.com/commodities/energy/scrapped-nearly-150-billion-worth-of-energy-projects-shelved-in-canada)}

_{7 - The Wall Street Journal - U.S. Looks to Ease Venezuela Sanctions, Enabling Chevron to Pump Oil, Date Accessed: October 5th, 2022 (https://www.wsj.com/articles/u-s-plans-to-ease-venezuela-sanctions-enabling-chevron-to-pump-oil-11665005719)}