Derrick Digest for Oct. 21, 2016: Canada’s need for an ‘energy civics’ lesson
The Derrick Digest is a weekly collection of curated content, based on events from across the oil and gas industry, that caught our eye at Pennine Petroleum Corporation. We hope you find it just as interesting as we do.
Oct. 21, 2016
It’s the law of unintended consequences, and Bill Whitelaw hopes it doesn’t come back to punish Canadians’ standard of living.
Whitelaw, the president and CEO of Calgary-based industry media outlet JuneWarren-Nickle’s Energy Group, recently delivered a passionate plea over Canadians’ lack of energy insight—and how turning our back on the plight of the energy industry may well have dire consequences down the road.
Whitelaw riffs on the old Ben Franklin Poor-Richard’s-Almanac proverb, opining that for the want of a drill bit, Canada’s economy was lost.
By and large, Canadians are “woefully, and shamefully, ignorant of the complex energy dynamics that shape and define their world,” he writes. “The reaction of most Canadians to the catastrophic state of Canada’s petroleum sector barely registers on the sensitivity scale.
“They have no sense of the longer-term impacts it will have on their lives. It’s too bad that a basic requirement for citizenship isn’t a basic course in ‘energy civics.’ ”
Foot-dragging on oil export pipelines
Canada. The “consultation nation.”
Another excellent opinion-editorial caught our eye this week, and it came from the desk of Edmonton Journal columnist Gary Lamphier, an unabashed backer of Canada’s energy industry.
In recent years, opines Lamphier, while Ottawa and its regulatory authorities have dithered and wrung their hands over the moral rectitude of building energy infrastructure, Canada has been left behind in the race for prosperity.
“While Canada’s federal government drags its feet on approving new oil export pipelines, Russia, Saudi Arabia, Iraq and Iran have been duking it out to secure a bigger slice of energy-hungry Asian oil markets,” writes Lamphier.
Carbon tax not sector-neutral, notes Wall
How can Canada make a meaningful contribution on the climate change front?
As an alternative to carbon taxes, Wall proposes that Ottawa takes its $2.65-billion, five-year commitment for climate change measures in developing countries—and spend it instead on research and innovation in Canada.
“The federal government does not appreciate the simple reality that a revenue-neutral carbon tax is not sector-neutral,” writes Wall in a Globe and Mail commentary. “Carbon-intensive, export-sensitive industries such as agriculture and energy, the backbone of Western Canada’s economy, will be hit the hardest.”
Long-term projects no longer in fashion
What does $60-a-barrel oil mean in the long run?
More short cycle. Less long cycle.
Energy industry guru Peter Tertzakian has weighed in with an intriguing column this week in the Financial Post, noting that with “60 being the new 90”—in other words, innovations, productivity gains, cost improvements and price wars having brought the global clearing price of oil down to US$60—long-term projects are no longer in fashion.
“Smaller capital outlays, faster payback and more certain returns have become de rigueur for oil and gas investing,” writes Tertzakian. “No more multi-billion-dollar, decade-plus projects that are subject to the long-term vagaries of geopolitics, the threat of expropriation, corruption, civil war, policy uncertainty or outright obsolescence.”