“Supporter Spotlight” features Canadians with a passion for Canada’s Natural Resource sector. Our spotlight this month is Kelly J. Ogle, CEO of the Canadian Global Affairs Institute. We talk to Kelly about the importance of Canadian natural resources and energy security.
Canada Action: Kelly, thank you so much for taking the time today. You are the Chief Executive Officer of the CGAI. You also manage the Energy Security Forum and you are the host of Energy Security Cubed, a weekly podcast discussing all facets of energy security. This question is for all of the students and young professionals reading this: How did you end up in your role and the energy security space?
Kelly Ogle: Thanks Angela I'm looking forward to talking to you today about all things energy! If we can back up a little, I just wanted to say that I'm certainly not a student myself (he laughs), and energy professional other than that I have several decades of experience in the energy sector. In terms of my background, I grew up in the oil industry from the time I was born. My father was in the industry in west-central Saskatchewan and I have a special affinity for heavy oil and products.
I have a degree in political science and when I was in my late 40s I decided to go back to University and I got a master's degree in strategic studies and security. During that period I did my Master's thesis on the asymmetric relationship between Canada and the US oil supply dynamic using the Keystone Pipeline as the linchpin of the paper. And the main conclusion about that is that we didn't then and we still don't have security of demand.
Canada has a giant supply of energy; we have the third-largest oil reservoir in the world - but we do not have security of demand because of the north-south pattern of trade of oil. And everyone reading this will understand the lack of egress for oil globally from Canada. So that was what led to interviews with the Canadian Global Affairs Institute to be on their board of directors. At the time they were looking to replace the CEO who was retiring and I just kind of fell into the job!
Canada Action: Europe is currently undergoing an energy crisis. The crisis has escalated even more since Russia’s invasion of Ukraine. In the past month, Russia has further reduced supplies to Germany, Italy and other members of the European Union. Just last week, Germany declared a gas crisis and talks of rationing to make it through the coming winter have already begun.
How does Europe’s situation position Canada as a global player in the energy sector and what lessons can we learn from Europe’s current situation?
Kelly Ogle: I read this morning that the Canadian government is talking to Germany at the G7 conference currently taking place, about Canada supplying LNG to Germany and Europe. How’s that going to happen? We’re not selling any LNG to anybody.
Canada has the amazing potential to sell all kinds of products globally but we aren't set up to do it until the TMX pipeline is completed which will be in 2024 and I'm going to contend that the last hundred miles will be the hardest to complete. We also don’t have an LNG export facility up and running yet and those products are intended for East Asia and the United States at present.
There needs to be political will instead of posturing by the government to talk about this and I think that people are very well aware of the situation. Having said that, we aren’t a player. It’s as simple as that.
We can talk and posture all we want but we aren’t a player.
Canada Action: Canada’s oil sands are the third-largest proven oil reserve in the world, representing 166.3 billion barrels (or 97%) of Canada’s 171 billion barrels of proven oil reserves. The oil sands are also the largest supplier of foreign oil to the US. Despite all technological advances and improved environmental performance, the term oil sands continues to have a negative connotation. Jason Kenney recently said that: “...we cannot allow some of the world’s worst regimes to have a dominant role in global energy markets”. Has there been a shift amongst leaders, both local and global, in regards to the oil sands? Can we expect an increase in Canadian oil sands production?
Kelly Ogle: There's a shift. I truly believe that. I'm very optimistic about the future of the oil sands. I spent last week in Washington DC, in fact in a workshop with several Canadian oil producers from the oil sands, including the recently created Pathways Alliance which includes the six major producers of oil sands crude that make up 95% of the oil sands production.
Several members of the Alberta Government and the federal government officials were there as well and they are all trying to help better educate Americans and those globally about the positive aspects of the oil sands.
At the conference, Kevin Birn, who's vice-president of oil sands and emissions at the S&P Global was quite adamant that their research suggests that the oil sands emissions will peak in absolute terms in 2025. I tend to agree because those companies spend hundreds of millions of dollars annually on research and development.
The Pathways Alliance is finding ways to reduce emissions dramatically. The Canadian barrel will continue to compete globally as time transpires because these companies know how to get things done and they know what needs to be done and they're doing it now. So I'm confident that the oil sands at its present production will remain constant for the foreseeable future and I'm talking decades.
Canada Action: As we turn towards renewables as part of our energy mix and we head towards an energy transition, what are some of the challenges we can expect and how can Canada ensure that our energy security is not threatened?
Kelly Ogle: Well first of all, let’s circle back to the security of demand. We need the TMX pipeline, we need LNG Canada and we need another export point for LNG. I’m very optimistic that eventually KXL will get finished because remember - the pipeline is completed to the US border. The pipeline is completed from Cushing Oklahoma to the refining suite in Louisiana and Texas Gulf.
That said, let's discuss renewables. I think the challenges are economic first, infrastructure second and the third thing that people don’t seem to understand is that all the talk of electric cars is interesting but remember that in the suite of 100 million barrels a day of global oil production, transportation makes up about 25% of the gasoline demand. So even if you did replace all of the cars and light-duty trucks with electric, it doesn’t have that giant of an effect on the total suite of products needed for global energy security such as jet, bunker sea oil for ships and natural gas.
Then the second point is that most of the discussion about renewable centers around the electrical grid. And you know there's the whole process of getting anything done like infrastructure. Offshore wind is expensive. The capital required is giant.
Having said that, you know there is certainly a position for wind and solar in climates that dictate it. Alberta’s got a giant capacity for wind in Southern Alberta. South-west Saskatchewan does as well. It’s really windy there.
But you know what? I just read this morning that in the last three days there’s been zero wind. And this leads to the second point about renewables like wind and solar and that is that you have to have baseload backup energy to create that power. And that leads to another point, the unintended consequence of that and that’s that you have to overbuild the wind and solar capacity in order to make sure that you have enough when you do use it.
Like Germany talks about having twice as much electrical capacity in renewables but they’ve only ever been able to implement 10% of their electric energy demand with renewables.
Canada Action: Natural gas plays an integral role in growing our food as it is an essential component of fertilizer, used as a raw material and as fuel for nitrogen fertilizer production. So not only is energy necessary to consume food, but also to produce, process and preserve it. More than one-quarter of the energy used globally is used on food production and supply.
As the world population rises, so is the concern for food security. How is Canada positioned to help alleviate global concerns over food shortages? Can Canadian LNG be part of the solution and make a substantial difference in energy-poor countries?
Kelly Ogle: So I just went to a conference last week and was astounded to find out that 70% of the cost of food is energy. So here we are in a situation where the crop in Ukraine and Russia may not be available for North-East Africa or sub-Saharan Africa. And I'm concerned that we could see abject famine and multiple thousands of people dead in the coming year because of this. So I hate to be the doom and gloomer here but this is probably the biggest concern I have with food security.
Canada, the United States, Brazil, Argentina and Egypt are big producers of grains, oilseeds and pulse crops. Canada can definitely play a role in trying to fill part of that vacuum. We are the second-largest producer, I believe, after Russia or Belarus of potash. There's enough production of food. It’s the distribution that's the issue and always has been and I’m also concerned about infrastructure.
Canada Action: Why do you think all Canadians should care about Canadian natural resource development? Is there any kind of message that you want to tell Canadians reading this?
Kelly Ogle: I'll try to be pragmatic. So as I said earlier, Energy is by far the largest Canadian export so it’s a giant part of how the country is funded. It also employs a quarter-million jobs across Canada. Not just in Alberta, Saskatchewan, Northwest Territories or northern BC. Quebec and Ontario as well. The two-way economy of production of goods and services such as almost all of the PPE that comes from Quebec.
So there are all kinds of reasons why it should be important to everyone. But I think the most important reason is that Canada is probably - and I will probably be accused of greenwashing here for sure - but Canada is probably the best example of a democracy producing hydrocarbons. We are the best jurisdiction in the world and have the best regulatory systems in the world including the Canadian government. As far as Saskatchewan, Alberta and British Columbia, the energy regulators are the best in the world at regulating and documenting the data that goes with the energy set. We’re really good at that.
And as the world continues to evolve and the transition continues, Canadian energy needs to be as big a part of it as it can. Canada's barrel needs to be the last barrel produced. I really hope it is.
It looks to me like the economics and the energy security aspects of today are going to dictate that our sources of energy in our exports like oil, natural gas and LNG are going to be here for a long time, generationally. So we need to make sure that we continue to have the best jurisdictions, the best regulators and the best systems of distribution we can do in Canada to help the globe. But we need an all-hands-on-deck approach to this though.
The polarity between those that see the energy transition as completely aspirational in that renewables are going to take care of everything, and those on the other end of the polarity that suggests we'll just continue on as we are because we know that it’s going to be needed… That doesn’t solve anything. We need to pull together as a country.
Canada Action: Is there anything else you would like to share with our readers?
Kelly Ogle: I'm optimistic about the future of Canadian energy. But things are changing dramatically with the war in Ukraine. Where this all ends up, who knows. But it's still going to be kinetic for quite a while I believe, unfortunately. There's the whole question of the next wrong move by Putin that could involve NATO and that would be astronomically bad.
So there are a lot of unintended consequences that are going to continue to happen such as if there's bad weather in Europe, which there will be some of it in the winter time. I applaud the ministers at the G7 for putting Canada out in front and at least getting the questions asked so that they can say “oh by the way we need to do quite a few things that can get us to those points of Canada being a better participant in global energy security”. But it's a long row to hoe.
But hey! We're sitting on a giant bounty of resources not just oil & gas but also critical minerals, and things that make fertilizers. So I just want to say thank you very much for having me on and I look forward to doing this again!
Canada Action: Thank you, Kelly! It’s been a pleasure!
This interview has been edited for length and clarity.
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