Alberta’s oil producers set record output, but the outlook is bleak

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White House appeal More oil Last week, oil from Saudi Arabia and Russia caused panic in Alberta, Canada, which is by far the largest foreign oil supplier to the United States.

The request was caused by the US President Joe Biden’s decision to revoke the key license. Perish Keystone XL pipeline. This $8 billion project aimed at transporting heavy crude oil from the oil sands of Alberta to Texas has faced fierce environmental opposition for many years.

“Why is the U.S. government blocking the import of energy from friendly Canada and at the same time demanding more energy imports from the OPEC dictatorship and Putin’s Russian regime?” Alberta Governor Jason Kenney asked Twitter.

Alberta has the world’s third-largest oil reserves, and its economic future is based on increasing exports to neighboring southern countries.

However, due to government commitments to deep decarbonization, United Nations-funded scientists warning of the worsening climate crisis, and Wall Street’s impact on fossil fuels, Alberta’s new oil sands project is in trouble, which is the most carbon-intensive project on the planet.

Extracting bitumen from Canadian oil sands is an energy-intensive method of crude oil production. Although efficiency has improved, Carbon dioxide equivalent emissions Still higher than most other oil sources. According to a Canadian report, between 2005 and 2019, total oil sands emissions increased by nearly 140%, reaching 83 million tons per year, accounting for more than 10% of Canada’s total emissions. submit To the United Nations.

Despite the cancellation of Keystone XL, Alberta’s oil production-mainly from the oil sands-reached A record high In the first half of this year, as prices plummeted last year and the province increased production quotas, the number of projects increased, with an average of 3.5 million barrels per day.

However, according to the Canadian Petroleum Producers Association, capital expenditures in the Canadian oil and gas industry have plummeted from a high of 81 billion Canadian dollars (65 billion US dollars) seven years ago to slightly more than 27 billion Canadian dollars this year. This trend indicates that future production growth will slow down.

Capp President Tim McMillan accused Justin Trudeau Federal Liberal Government Regarding policies that he said had a “dampening” impact on investment, such as the federal carbon tax and a new law that strengthened environmental supervision of new energy projects such as pipelines.

Petroleum analysts say that broader forces are more important, including doubts about long-term demand, the impact of the price collapse last year, and policy changes aimed at fossil fuels.

A TC Energy pumping station is located behind the mound of the Keystone XL crude oil pipeline because it is idle near Oyen, Alberta, Canada
Capital expenditures in the Canadian oil and gas industry have fallen sharply © Todd Korol/Reuters

For example, the asset management company BlackRock now confuses the oil sands industry and Civilian guns, tobacco and other untouchable sectors.Some Insurance company Some banks said they would not provide funding for new oil sands projects.

“If the government takes their net zero goal seriously, [then] High-cost and ESG-sensitive supplies like the Canadian oil sands cannot grow, and their continued existence is questioned,” said Al Salazar, vice president of intelligence at consulting firm Enverus. (ESG refers to environmental, social and governance matters.)

For now, the consensus is that the expansion of oil sands will be much slower than expected ten years ago, when international oil companies joined the subsequent gold rush. Northern Alberta.

Alex Pourbaix, chief executive of Cenovus Energy, Canada’s second-largest producer, said his company is using the cash flow from this year’s rising oil prices to eliminate debt and repay shareholders. Small-scale expansion of existing assets will lead to any growth.

“It will not have those huge capital projects,” he told the Financial Times.

Rival producer Suncor Energy told investors that it will pursue “value greater than quantity” by 2025. Natural Resources Canada is the country’s largest producer and plans to increase spending only moderately.

A bar graph of greenhouse gas emissions (kg of carbon dioxide equivalent) for selected grades of production shows that Canadian oil sands are extremely carbon-intensive

“Shareholders don’t want (the company) to grow now. In this world, I don’t think new oil sands projects will be popular anyway,” said Jackie Forrest, executive director of the Calgary Arc Energy Institute.

Kevin Birn, chief analyst of the Canadian oil market at consulting firm IHS Markit, estimates that if the project is optimized and the planned expansion resumes, oil sands production will increase by up to 650,000 barrels per day by 2030.

Byrne believes that the company can transfer cash to the decarbonization business instead of using it for growth as an “investment in future competitiveness.”

Canada’s five largest producers recently proposed a 75 billion Canadian dollar plan Decarbonization project This includes the potential use of carbon capture, utilization and storage, and small-scale nuclear technology to eliminate emissions from operations.

Forrest said that federal and provincial measures—including carbon taxes, clean fuel standards, and upcoming tax credits—should make decarbonization attractive to operators.

“Assuming the Liberal Party joins again, we will have enough clarity, the policy will be there, and we will see a lot of investment,” she said. Trudeau announced on Sunday that an early election will be held on September 20.

Histogram of megatons of carbon dioxide equivalent shows that Canadian oil sands emissions have risen sharply since 2005

If they can be greened, supporters say the golden age is waiting for the oil sands, because the stuttering US Shale production Insufficient investment in supply elsewhere has increased the strategic value of deposits in Western open countries.

“By the end of this decade, Canada will become a quarter of the free world oil,” said Adam Waterous, head of the Calgary private equity firm Waterous Energy Fund.

Critics say that Alberta is pinning its hopes on the optimistic outlook of global oil demand, which will not be realized if the world reaches its emission targets.The province recently lost one Supreme Court The fight to stop Canada’s carbon tax has investigation Environmentalists funded and created a unit to counter critics in the media and Hollywood.its Twitter The account says that last week’s UN Climate warning Contains “the rhetoric of the end of the world”.

“Alberta has not internalized that oil demand is declining and forecasts for climate impact are deteriorating… have fundamentally changed the outlook,” said Simon Dyer, deputy executive director of the Pembina Institute, a clean energy think tank. “This is incompatible with the global climate dialogue that is taking place in the investment community and around the world.”



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