Squeeze the industry to please his party’s green base or keep output, revenue and high-paying employment flowing?
Talk at the latest climate-change shindig in Dubai has centred around the future of the oil industry and whether countries should pledge to phase out oil and gas production entirely or simply transform the industry in decades to come. Canada always talks a deep-green game at these affairs but are we really ready to nail shut the oil and gas coffin?
Maybe not. In Dubai Canada announced a cap-and-trade approach to oil and gas emissions but argued it won’t actually stop oil and gas production outright. The provinces, who yet again weren’t consulted, may not agree. Besides, promises are one thing. The record is another.
It also emerged in Dubai that the Emirates, seventh largest oil producer, is expecting to increase its production by a million barrels a day (mbd) by 2030. This is not a new trend. According to the U.S. Energy Information Service, the UAE increased production of oil and hydrocarbon liquids like coal oil by 15.3 per cent between 2015 and 2022, from 3.7 mbd to 4.2, fourth-most of all oil-producing economies. That’s much faster than world output, which was up only 3.6 per cent since 2015, reaching 100.1 mbd last year.
The irony — maybe even the hypocrisy — is that three countries in the Americas have increased their petroleum output even more than this Middle Eastern oil sheikhdom has: the U.S., Brazil and, yes, us: Canada.
The Biden administration, which is promising 2030 emissions will be half 2005 levels, has so far failed to stymie oil and gas development. U.S. petroleum and liquids production has soared by 33.9 per cent since 2015, reaching 20.3 mbd in 2022. Two-fifths of the increase has been on Biden’s watch. The U.S., not Saudi Arabia, is now the world’s leading oil producer, accounting for fully 20 per cent of global supply.
The Trudeau government has pledged that 2030 oil and gas emissions will be 42 per cent lower than in 2005. This has led to tensions with the oil- and gas-producing provinces, which are resisting emissions caps for oil, gas and electricity. Ottawa’s opposition to liquefied natural gas sales even as the U.S. and Qatar are making great inroads in the world market has had industry leaders scratching their heads. Even so, since the Liberals came to power in 2015, Canada’s oil and gas production has grown second fastest globally, at 26.7 per cent, to reach 5.6 mbd last year. Much of this growth is due to big investments in the oil sands before 2015 but the production increase has been accommodated by pipeline expansion, with the federally-owned TMX soon to come on stream.
Neither Biden nor Trudeau is attending COP28 but Brazil’s president, Lula de Silva, stormed in at the head of a delegation of 2000 to repeat a pledge to cut 2030 emissions to less than half 2005 levels. Much of reduction results from reforestation, however, not phasing out oil and gas. And, to the surprise of attendees, Lula announced that Brazil will align itself more closely with OPEC. No shock there. Since 2015, Brazil’s oil and gas production has risen by 20 per cent, making it the 8th largest producer in the world at 3.8 mbd last year. It now evidently sees itself as a player.
Besides the U.S. Canada, Brazil and UAE, only Iraq (at 10.4 per cent) and Kazakhstan (at 4.5 per cent) have seen their oil production grow faster than the world average since 2015. The rest have had little growth, with seven countries registering declines, including 22.4 per cent in Mexico and 36.7 per cent in Nigeria, the biggest drop anywhere.
The standstill or even loss in oil and gas production in many oil-producing countries since 2015 is due to several factors. Oil prices dropped by three-fifths after 2014 and the pandemic caused another crash. More recently, Saudi Arabia and Russia have persuaded OPEC+ to constrain production and push prices to over US$80 per barrel — mainly in order to replenish their treasuries. In some places, including Ghana, the U.K. and Norway, old fields are depleting. Elsewhere, but especially in Africa and Mexico, crime and political instability continue to discourage development. Finally, in the face of lagging demand, investors have encouraged companies to distribute profits rather than invest in greenfield oil and gas projects.
But top producers like the U.S. and Canada are not holding back and governments aren’t stopping them. Phase-out is all short-term cost in pursuit of climate gains that won’t be realized for decades, if at all. Nor are politicians willing to eliminate the tax revenues and high-paying jobs the industry generates. With energy security crucial in an increasingly dangerous world, oil-consuming countries are finding that intermittent renewable energy and other high-cost energy sources are no substitute for fossil fuels.
As the federal Liberals sink in the polls, they face a many-ways existential choice. Do they pursue their climate promises and phase out oil and gas? Or do they secure the benefits of oil and gas production for years to come? Or, a third option: do they say one thing but quietly do the other? Is it all, as Shakespeare would say, “much ado about nothing”?
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The Carney government, which on Monday survived a confidence vote in Parliament by the skin of its teeth, recently released a “second tranche of nation-building projects” blessed by the Major Projects Office. To have a chance to survive Canada’s otherwise oppressive regulatory gauntlet, projects must get on this Caesar-like-thumbs-up-thumbs-down list.
The first tranche of major projects released in September included no new oil pipelines but pertained largely to natural gas, nuclear power, mineral production, etc. The absence of proposed oil pipelines was not surprising, as Ottawa’s regulatory barricade on oil production means no sane private company would propose such a project. (The first tranche carries a price tag of $60 billion in government/private-sector spending.)
Now, the second tranche of projects also includes not a whiff of support for oil production, transport and export to non-U.S. markets. Again, not surprising as the prime minister has done nothing to lift the existing regulatory blockade on oil transport out of Alberta.
So, what’s on the latest list?
There’s a “conservation corridor” for British Columbia and Yukon; more LNG projects (both in B.C.); more mineral projects (nickel, graphite, tungsten—all electric vehicle battery constituents); and still more transmission for “clean energy”—again, mostly in B.C. And Nunavut comes out ahead with a new hydro project to power Iqaluit. (The second tranche carries a price tag of $58 billion in government/private-sector spending.)
No doubt many of these projects are worthy endeavours that shouldn’t require the imprimatur of the “Major Projects Office” to see the light of day, and merit development in the old-fashioned Canadian process where private-sector firms propose a project to Canada’s environmental regulators, get necessary and sufficient safety approval, and then build things.
However, new pipeline projects from Alberta would also easily stand on their own feet in that older regulatory regime based on necessary and sufficient safety approval, without the Carney government additionally deciding what is—or is not—important to the government, as opposed to the market, and without provincial governments and First Nations erecting endless barriers.
Regardless of how you value the various projects on the first two tranches, the second tranche makes it crystal clear (if it wasn’t already) that the Carney government will follow (or double down) on the Trudeau government’s plan to constrain oil production in Canada, particularly products derived from Alberta’s oilsands. There’s nary a mention that these products even exist in the government’s latest announcement, despite the fact that the oilsands are the world’s fourth-largest proven reserve of oil. This comes on the heels on the Carney government’s first proposed budget, which also reified the government’s fixation to extinguish greenhouse gas emissions in Canada, continue on the path to “net-zero 2050” and retain Canada’s all-EV new car future beginning in 2036.
It’s clear, at this point, that the Carney government is committed to the policies of the previous Liberal government, has little interest in harnessing the economic value of Canada’s oil holdings nor the potential global influence Canada might exert by exporting its oil products to Asia, Europe and other points abroad. This policy fixation will come at a significant cost to future generations of Canadians.
Carney is promoting LNG as Canada’s future. Alberta insists the future still runs through oil
Prime Minister Mark Carney is a man in a hurry. He’s fast-tracking energy megaprojects to position Canada as a global LNG powerhouse, but Alberta’s oil ambitions and the private sector’s U.S. focus could throw his plan off course.
It’s all part of a broader federal strategy to reframe Canada’s energy priorities and show that his government is delivering economic results. Some say the motivation is political, with a fragile minority government and the potential for a snap election.
Others say it’s about legacy: Carney wants to be remembered as the prime minister who put Canada back on the global energy map.
That ambition came into sharper focus last week. On Thursday, he announced a second wave of projects being sent to the federal Major Projects Office, a body set up to fast-track infrastructure Ottawa sees as vital to national priorities.
The new list includes the Ksi Lisims liquefied natural gas project and the North Coast Transmission Line in British Columbia, along with a hydroelectric project in Nunavut. It also features nickel, graphite and tungsten mines in Ontario, Quebec and New Brunswick.
Ksi Lisims is the second LNG project Ottawa has submitted to the Major Projects Office.
Carney’s goal is clear, according to Lisa Baiton, president of the Canadian Association of Petroleum Producers. “With Ksi Lisims LNG and the related Prince Rupert Gas Transmission project joining LNG Canada Phase 2 on the major projects list, paired with Cedar and Woodfibre LNG, which are already under construction, Canada is on a path to become one of the top five LNG exporters in the world,” she said in a statement.
But not everyone is on the same page, especially Alberta.
The first batch of fast-tracked projects, announced two months ago, included a Montreal port expansion, a small modular nuclear plant in Ontario, mining projects in Saskatchewan and British Columbia, and LNG Canada Phase 2.
Alberta’s proposed oil export pipeline project was on neither list.
Premier Danielle Smith had said she hoped an agreement with Ottawa would be finalized by early last week to allow a new bitumen pipeline to proceed. That didn’t happen. But in a statement last Wednesday, her office said “sensitive” negotiations are continuing.
“Currently, we are working on a (memorandum of understanding) agreement with the federal government that includes the removal, carveout or overhaul of several damaging laws chasing away private investment in our energy sector, and an agreement to work towards ultimate approval of a bitumen pipeline to Asian markets,” the statement said.
Alberta argues such pipelines are critical if Canada is serious about energy diversification and global exports, particularly to Asia, where demand is rising. So far, those arguments don’t appear to have moved Carney.
With no federal deal in place, the industry is moving ahead with its own export agenda by doubling down on the U.S. market.
Enbridge has approved $1.4 billion in upgrades to its Mainline and Flanagan South pipelines, adding 250,000 barrels per day of capacity to move Canadian crude to the U.S. Midwest and Gulf Coast. The expansion is expected to come online in 2027.
The company also plans to test commercial demand in 2026 for a second phase of Mainline expansion that could add another 250,000 barrels per day.
Colin Gruending, Enbridge’s president of liquids pipelines, said the U.S. remains the most logical export market for Canadian oil, followed by Asia via the West Coast. The federal government’s goal of reducing reliance on U.S. buyers may take time.
Trans Mountain Corp., which moves oil sands crude to the Vancouver area for export, is reportedly also considering ways to increase volumes quickly and affordably.
Keystone XL, the pipeline project killed by former U.S. president Joe Biden in 2021, may also be back in play. The existing Keystone system, now owned by South Bow Corp., moves Canadian oil to U.S. Gulf Coast refineries. The cancelled XL expansion would have added new pipe and a more direct route south.
Whether Carney’s push makes Canada an LNG superpower or hits a wall of regional resistance and market reality, the energy and political maps are shifting.
Toronto-based Rashid Husain Syed is a highly regarded analyst specializing in energy and politics, particularly in the Middle East. In addition to his contributions to local and international newspapers, Rashid frequently lends his expertise as a speaker at global conferences. Organizations such as the Department of Energy in Washington and the International Energy Agency in Paris have sought his insights on global energy matters.
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