Newsletter July 11, 2022
A WORD FROM THE PRESIDENT
Canadian energy's changing landscape
At the Energy Council of Canada’s June Board meeting, we welcomed four new directors. They are Adel Muna, Global Director of Power for Hatch, Derek Olmstead, Administrator & CEO at the Alberta Market Surveillance Administration, Chris Fralick, President and CEO of Atura Power, and Grand Chief Michael LeBourdais, Founding Chair, Vice President, and Executive Director of the Western Indigenous Pipeline Group. The ECC is pleased to broaden and deepen the organization’s leadership. We hope to add more directors soon. ECC spans the various energy sector industries. It is critical that it be guided by participants with a breadth of experience and a range of perspectives.
The sector is evolving rapidly. This year especially, members must deal with immediate crises while continuing to develop new processes and technologies to reduce the long-term environmental impacts of energy production and use. A part of that evolution is the greater influence that Indigenous peoples have in the sector. From a time when Indigenous interests were, at best, an afterthought, Indigenous communities are now helping to shape energy projects. Moreover, Indigenous peoples are themselves owners and developers. This year the ECC is dedicating its annual compendium, Canada’s Energy Story, to Canadian Indigenous energy. Members will share accounts of how they have ensured that Indigenous rights, culture, and economic interests are respected and accounted for.
GUEST COLUMN
From a discussion with Dean Tucker,
Vice Chairman and COO, World Petroleum Council Canada
You’ve heard of the WPC: the World Petroleum Congress?
What about its counterpart, the WPPC — the World Petroleum “Pivot” Congress? That could well be the unofficial brand tied to the Congress in Calgary in 2023 when the World Petroleum Council (WPCouncil) hosts its triennial gathering built around the theme: Energy Transition: Path to Net Zero.
For Calgary’s David Layzell, the theme speaks volumes. It’s the first time that a fully-fledged hydrogen discussion will occur at a Congress — and its inclusion symbolizes the theme. That Canada was selected by the WPC to host and cast into action the energy transition theme is particularly germane, given the country’s progress on the hydrogen front.
Dr. Layzell, a long-time energy systems thinker, thinks a lot about hydrogen. As a research director with The Transition Accelerator, he is a leading advocate for the role a full-spectrum hydrogen system will play in a transitioning energy world which aspires to get to net zero. The Accelerator has become a major change agent on Canada’s hydrogen landscape.
Dr. Layzell chairs the Congress’s hydrogen forum. Along with vice-chairs Laurent Allidieres of Air Liquide in France and Osamu Ikeda of Chiyoda Corporation in Japan, he will select the hydrogen-oriented technical papers and posters submitted from around the world. Their authors hope to be invited to present at the September 2023 Congress. From the WPCouncil’s technical paper call:
The use of hydrogen in transportation and stationery power supply is free of on-board carbon emission and offers an alternative climate change solution. This forum will present use cases, efficient and innovative generation processes, distribution, and transportation. The forum will also discuss production pathways comparing their environmental and economic impacts and demonstrate viable technology solutions for the distribution and storage challenges of the tiny molecules.
The hydrogen forum is one of 17 such forums, grouped under four blocks, that capture key themes and topics of a sector transforming itself and diversifying in the process.
Dr. Layzell says that, ideally, papers and posters suggested for inclusion will focus on hydrogen’s full value chain. In a world professing net zero aspirations, for example, he points out nearly 50 per cent of emissions in Canada come from the distributed combustion of gasoline, diesel, jet fuel, and natural gas. That reality offers the petroleum sector new opportunities, he suggests.
“It’s pretty clear those [emissions levels] are not compatible with a net-zero future. So, we either say ‘Shut down the oil and gas sector … or think about the sector making zero-emissions fuels like electricity and hydrogen made without carbon emissions,’” said Layzell. “The value of our section [at this Congress] is that it’s a bit of a wake-up call.”
Dr. Layzell points out the petroleum sector in Alberta already produces significant amounts of hydrogen as a feedstock for petrochemical processing and so its logical — and emission-less — evolution as a fuel itself makes sense if “we create an entirely new value chain.”
Dr. Layzell and his two vice-chairs have counterparts in 16 other areas, each tasked with selecting the papers and posters that will flesh out the technical program’s framework. Abstracts between 100 and 300 words are due August 8 — and the authors of successful submissions will know by the fall if they will be on stage in September 2023. The four blocks cover a broad range of upstream-to-downstream themes.
• Transition in Exploration and Production (five forums);
• Transition in Gas and Transportation (four forums);
• Transition in Refining, Petrochemicals and Products (five forums);
• Transition in Leadership (four forums).
More information about the submission process can be found at: Welcome – World Petroleum Congress 2023.
WPCouncil Canada — the Canadian arm of the global Council — officials hope for a strong Canadian showing in the technical forum, which is typically dominated by subject matter expertise from other countries, given the energy transition theme — itself underpinned by a focus on emissions reduction, noted COO Dean Tucker.
“As host country, we have some input into what the program will be like. We took things further this time and really lobbied the international program committee and international secretariat to really press home the point about emissions reduction,” noted Tucker. “There was a great willingness to definitely structure things around transition in different areas of the industry.”
A typical Congress attracts 15,000 delegates from 100 countries, including high-level government officials, politicians and corporate leaders.
That Canada will host an important “pivot” moment in the global sector’s evolution is a testament to what’s already happening here, noted Tucker. “We’re hoping to be a springboard … so that when everyone comes here, they’ll see what we’re doing and continue to come back. This effort will help Canada be part of that upper echelon of cleantech juggernauts that will transition the world.”
ECC Q2 ACTIVITIES
In late March, ECC President, Jacob Irving, published an article in The Hill Times that discussed the situation Canada finds itself in as Russia becomes increasingly isolated as a result of its invasion of Ukraine. The article confronted the fact that the supply of Russian oil and natural gas to Europe will be curtailed for the foreseeable future. Canada has only a limited ability to help replace that supply. In the case of natural gas, we are constrained by a lack of infrastructure to transport gas to tidewater and liquefy it for shipment overseas. Canadian gas, at this point, can only find its way to markets outside of North America through pipeline connections to the US and from there through LNG terminals in that country.
In light of the threats to the economic security of our European allies, Canadians should now re-consider the factors that determine our decisions on LNG infrastructure. Currently there is one LNG export facility under construction with two more under consideration. Do we have a moral obligation to take measures to ease the pressure on European countries dependent upon Russian energy? Should we build more LNG infrastructure? These facilities could be very helpful in transitioning to hydrogen-based energy.
In May, Jacob Irving attended the Canada Gas and LNG Conference in Vancouver. He participated in a panel with Kelly Ogle, President of the Canadian Global Affairs Institute, and Christy Clark, former Premier of BC. The panel addressed the recent changes in the LNG market in particular and what that might mean for Canada. They also discussed what happened to the 18 proposals for LNG facilities that were under consideration 8 years ago.
While in Vancouver for the Canada Gas and LNG Conference, Mr. Irving gave an interview to French language CBC (Radio-Canada Columbie-Britannique-Yukon). He stressed the fact that Canadian LNG is relatively low-emission compared to our competitors. That is due to a large extent to the high proportion of Canadian electricity generated from hydropower. The power used to create domestic LNG comes largely from non-emitting sources. While natural gas is a fossil fuel, it can play an important role in not only displacing higher emission fuels, like coal, but can also be transformed into zero-emission hydrogen. He noted that LNG is a competitive international market. Canada will have to move quickly if we want to be a player in that market.
In early June, Mr. Irving participated once again with Kelly Ogle in an open conversation about energy, both domestic and international. The event was sponsored by the Canadian International Council – Saskatchewan Branch.
ECC Member, Siemens Energy, invited Jacob Irving to join Arne Wohlschlegel, Managing Director of Siemens Energy Canada, in a conversation that is part of an ongoing podcast series produced by the company. The topic under discussion was Working Together To Accelerate the Energy Transition in Canada.
The discussion noted the often under-appreciated significance of Canadian energy in comparison to other nations. At the same time, Canada is highly sensitive to the environmental impacts of its energy sector. The country is taking steps to reduce those impacts and the energy industries have made significant progress. Both speakers acknowledged that a transition to arrive at a significantly lower emitting energy sector will require the cooperation of many players. A good example of that cooperation is that between the ECC and Siemens Energy in Canada.
In late June, Global Affairs Canada (GAC) hosted a mission of senior officials from the Department of Energy of the United Arab Emirates (DOE). GAC invited the ECC, as well as ECC member, the Canadian Nuclear Association (CNA), to participate in meetings with the officials. The UAE mission was led by HE Eng Awaidha Murship Almarar, Chairman of the DOE. ECC Chairman Howard Shearer, participated in the meetings. ECC gave an overview presentation on Canada and the Canadian energy sector. The visitors had a particular interest in nuclear power and the development of Small Modular Nuclear Reactors (SMRs). Mr. Shearer and the CNA were able to address those issues in detail.
ECC wishes to thank the CNA for facilitating the participation of ECC staff in the meetings.
IN THE NEWS
In late March, the governments of Ontario, New Brunswick, Alberta and Saskatchewan released a strategic plan that they have jointly developed to advance the development of Small Modular Reactors (SMRs). Government officials in the provinces see SMRs as both an economic opportunity for Canada as well as a means of addressing unique Canadian challenges to the delivery of electricity – especially in remote communities – in a way that avoids GHG emissions.
Following a meeting in late May in Berlin among G7 energy and environment ministers, Natural Resources Minister Jonathon Wilkinson expressed support for the idea of constructing two LNG terminals on Canada’s east coast. The projects are currently being evaluated by the prospective developers. The Minister said that the projects will have to demonstrate their contribution to reducing GHG emissions. This requirement could be partly addressed by using electric drive technology to liquefy the gas and by designing the facilities so that they could be converted to producing hydrogen.
On 7 April, the federal government tabled its 2022 budget. Flow-through shares, investment tax credits for CCUS, and favourable treatment of manufacturing and purchase of qualifying clean energy equipment are three of the measures affecting the energy sector.
Natural Resources Minister Jonathon Wilkinson announced Canada would increase oil exports by 300,000 barrels per day in 2022. The government consulted with the provinces and industry to arrive at this level. The measure is to help EU countries replace lost Russian imports.
Canada’s inflation rate is close to its level in 1983. In May the consumer price index rose 7.7%. Only the rate of 8.2%, recorded almost 40 years ago, is higher. Energy prices were up 34.8%; the cost of gasoline rose 48%. Energy and food appear to be driving higher inflation.