Canada must slash the greenhouse gas emissions from its oil production in order to lure companies back to investing in increasing oil and gas production and expanding projects, Natural Resources Minister Seamus O’Regan told Reuters in an interview this week.
“If you do what is required to lower emissions, you will be rewarded with increased investment. If you don’t, you’ll be punished,” O’Regan told Reuters in a phone interview.
According to the minister, Canada’s oil industry has shown resilience in the face of many challenges in recent years and is changing with the pandemic and the increased environmental awareness from investors, shareholders, and the general public.
If Canada wants to continue growing its production, it needs to slash the greenhouse footprint of its oil, O’Regan said.
According to a May 2020 report from Rystad Energy, Canada had the highest CO2 emission intensity per barrel of oil equivalent (boe) produced among the top 10 oil and gas producing countries in 2018.
Canada has an average intensity of 39 kg per boe, because it has a high share of its production from oil sands, typically emitting three to five times more CO2 per barrel than the global average, Rystad Energy has estimated.
Most recently, France’s supermajor Total booked US$8.1 billion in asset impairments, including US$7 billion impairment on Canadian oil sands assets alone. Total has reviewed the assets that could be qualified as “stranded assets”—and the only assets in this category are the Canadian oil sands projects. Total also said it would not approve any new project of capacity increase on these Canadian oil sands assets.
Alberta’s Energy Minister Sonya Savage commented on Total’s decision:
“At the same time Total is dismissing the leadership of Canadian producers who are doing their part with active strategies that have reduced emissions, they continue to invest in countries such as Myanmar, Nigeria and Russia. This highly-hypocritical decision comes at a time where international energy companies should, in fact, be increasing their investment in Alberta, rather than arbitrarily abandoning a source of a stable, reliable, supply of energy.”
The coronavirus crisis and the collapse in oil prices will not be the death knell for Canada’s oil sands, as production will still grow through 2030 to reach 3.8 million bpd, just 100,000 bpd lower than pre-crisis output projections, IHS Markit said in its latest analysis at the end of July.