Renewable energy is not alternative energy.
David Daly, manager of fiscal policy with the Canadian Association of Petroleum Producers, made this point on Tuesday during the Canadian Association of Oilwell Drilling Contractors’ fall conference in Red Deer.
He described how the International Energy Agency is forecasting a steady increase in global energy consumption over the next few decades — fueled by population growth and rising living standards.
“There’s going to be a demand for all forms of energy,” said Daly, adding that this will include hydrocarbons.
“A lot of people that are not involved in the energy business have a perception that a lot of oil and gas, and fossil fuels, can be replaced and replaced pretty quickly by renewable and sustainable fuels.
“But the International Energy Agency sees all fuels as being necessary to meet global energy demand. They don’t see any drop-off in terms of demand for fossil fuels over the next 20 to 25 years, or longer, even with growth in renewable energy demand.”
Accordingly, it doesn’t make sense to try to stop hydrocarbon production, said Daly. Instead, we should seek to make the process more efficient, effective and sensitive to environmental, health and community concerns.
The energy sector has made great strides in this regard, he said. Greenhouse gas emissions per barrel of oil have declined by 26 per cent over the last 20 years. And new technologies are boosting production, lowering costs and reducing the environmental footprint of the energy sector.
Daly emphasized the importance of the petroleum sector to Canada. In 2011, it spent $54 billion on exploration and development, and contributed $21 billion to federal and provincial government coffers in the form of taxes and royalties. It’s responsible for 18 per cent of Canada’s exports and 550,000 domestic jobs.
He produced a long list of Ontario and Quebec companies that supply goods and services to the oilsands.
“It’s not just Alberta’s resource, but it’s a resource that benefits the whole country.”
The industry does face challenges, said Daly.
On the oil side, new technologies have boosted production in the United States, reducing the need for imports from Canada.
“So by 2035, it will be quite a bit lower than it is today.”
Consequently, Canada needs to develop new markets. And with demand for oil in China, India and other Asian countries projected to climb, it makes good economic sense to develop Enbridge’s proposed Northern Gateway pipeline to get Alberta oil to West Coast terminals, said Daly.
Similarly, he added, there’s a strong economic argument in favour of TransCanada’s planned Keystone XL pipeline, which would move Alberta crude to the massive Gulf Coast refineries that currently process oil from other sources.
Natural gas producers in Canada have also been hurt by new technologies and increased production south of the border. Their share of the North American market has dropped to about 20 per cent from 28 per cent over the last half-dozen years.
By contrast, there is growing demand and much higher prices in Southeast Asia. That’s prompted a flurry of liquefied natural gas terminal projects on the British Columbia coast.
Daly said the biggest challenge facing the oil and gas sector is labour, with the number of positions growing while many skilled workers approach retirement. The industry must also work hard to convince the public of its importance and that it’s operating in an economically, environmentally and socially responsible manner.
The Canadian Association of Oilwell Drilling Contractors represents the Canadian contract drilling and service rig industry.