The government wants Alberta's oil sands companies to produce oil without increasing the amount of carbon in the atmosphere, and the so-called "net zero" emissions cap is a competitive advantage for Alberta oil. However, it's not the same for Eastern Canadian refineries importing oil from other countries.
00:01:19.780In the Prime Minister's mind, this is decarbonized oil that we make here, and if any new pipelines are built out west, it is decarbonized oil that they'll be carrying.
00:01:31.960However, it's not the same for Eastern Canadian refineries importing oil from other countries.
00:02:59.580Well, this is a situation that's developed since the last election and been brought to a head by Prime Minister Carney's reference to what he called decarbonized oil.
00:03:12.560It wasn't something that was raised during the election, but it's come up since then.
00:04:14.940What they're saying is that this is an attempt to limit the emissions that are going to the atmosphere in Canada.
00:04:23.600And so, the idea behind decarbonized oil is that the emissions from oil sands production will be captured and sequestered in the ground.
00:04:37.920And this is an attempt to ensure that Canada moves towards, it'll never reach net zero, but that it'll theoretically move towards producing more oil, but maintaining or reducing the emissions in Canada.
00:04:56.740And so, what you're doing is you're capturing these emissions from these oil sands producing facilities, re-compressing them and re-injecting them into geological formations underground.
00:05:11.740But this happens under very, very high pressure, requires pipe manufactured to extreme specifications, and costs a hell of a lot of money.
00:05:25.580It's the minimum estimate so far that industry has spent through the Pathways Project are reported billion dollars just on the basic engineering so far.
00:05:34.980For people who don't follow the energy industry as closely as you do, the Pathways Alliance has been established by the big oil sands producers, four of them, to construct a facility to capture these emissions and inject them underground.
00:05:53.620Now, they're already doing that in Weyburn, Saskatchewan, I believe, and not Pathways.
00:06:00.420In Weyburn, what's doing on is called EOR, Enhanced Oil Recovery, where they're capturing emissions from coal facilities, and they're re-injecting those underground to pressurize wells to bring more oil to the ground.
00:06:15.580And they've produced a lot of oil by doing this.
00:06:21.080Now, the government doesn't like this because you're adding oil to the equation.
00:06:25.480And they, in fact, what has happened is that the government of Canada has specifically set out tax relief for companies that can decarbonize or capture emissions, but they specifically excluded EOR from those tax regulations.
00:07:01.700But for the way you're talking about it, it sounds like it's a sort of a high school chemistry experiment in scale compared to what you would have to do to bury carbon dioxide sufficient to…
00:08:05.700Now, let's just start a little bit further back.
00:08:08.760This idea of an emissions cap, which is now apparently in play, there's no other country in the world that is doing that to its oil producers.
00:08:20.060Canada is an outlier in this, as I explained to the Standing Committee to the House.
00:08:26.700Not even Norway, which is pursuing injection facilities for carbon to inject the emissions underground, is doing that for its oil industry.
00:08:38.720It has a major facility that's under production, but that's for cement production from Germany.
00:08:48.080When you move past that discussion, you move into, well, where will you take emissions?
00:08:55.260Well, what's happening is that the government of Canada is selectively picking Canadian oil production, not, as you pointed out, eastern oil imports or transportation emissions or whatever.
00:09:11.200They're specifically targeting, in fact, the oil sands before that oil can be released.
00:09:17.860Now, when you add $16 to $24 billion onto your cost of production, before you build a $20 to $34 billion pipeline, you're looking at very significant penalties for Canadian Western producers.
00:09:35.420Well, I won't ask you to go out on a limb and say how much per barrel this could add, because who knows?
00:10:06.420And so, you know, the government loves talking about stranded assets.
00:10:12.480If we're going to get out of oil, all of these facilities will be stranded assets.
00:10:16.720Well, let me tell you, this huge decarbonization project could be a gigantic stranded asset if the price of oil goes below where it is now.
00:10:28.240In fact, it's a very critical price point right now for all these plants.
00:10:37.100Well, if you can't export that oil, and there are estimates that these policies have cost Canada around $680 billion in capital that's fled the country over the last 15 years.
00:11:03.000And that's just capital that's left by projects that haven't been built.
00:11:09.500If you look specifically at the numbers involved with some of the pipelines, for instance, these pipelines and the production from them that's going offshore is not only competing with oil that's coming in from Venezuela and the United States.
00:11:26.600I mean, of those imports to eastern Canada, 72% originating in the United States.
00:11:57.320I mean, I hate to ask you to put yourself inside the liberal mind, but how do you think that they could ever justify that to themselves?
00:12:06.400We're talking about the smoke-filled room, the back room, where everybody's sitting around.
00:12:12.640How are we going to, if you think we could ever stick it to the Alberta oil industry and not put something similar on importing oil from outside the country?
00:12:25.080Well, as you said, most people would say, no, you never get away with that, but they're getting away with it.
00:12:28.840Well, as you said in your opening comments, we appear to have two oil policies in Canada, one for the east and one for the west.
00:12:38.120The east, unrestricted imports of any kind, which is taking vast quantities of money as the numbers I cited are well over $500 billion over the last 20 or 30 years.
00:12:53.480So a very interesting thing happened this week.
00:12:57.640Bill Gates came out just in advance of the COP30 conference in Brazil and suddenly changed his position on global warming to say we're concentrating too much on emissions as opposed to practical solutions to cope with the warming.
00:13:14.080Now, this is a position that's been taken by scientists and ignored by the media largely for the last 20 years.
00:13:20.160This is a very significant commentary because what's happening is that the world is, there was a quote I saw just this morning, the world is transitioning away from the energy transition.
00:13:36.160That is something that's putting the Kearney government and the Canadian government in a very difficult position.
00:13:43.160The rest of the world is pivoting away from the idea that you can eliminate a hydrocarbon economy and an energy producing economy and replace it entirely with renewables.
00:13:57.160Just saying, look, we know that's now wrong and now we're moving into a situation to say we have to focus on adaptation.
00:14:05.160Well, you see, I mean, Bill Gates comes out, Bill Gates has been a very strong proponent of cutting carbon emissions to fight global warming.
00:14:33.160And the fact that he decided to make that announcement just before COP30.
00:14:37.160And, you know, it is almost predictable.
00:14:41.160The UN conferences, this is the 30th conference now.
00:14:45.160And aside from the costs of jetting all these people to the Brazilian rainforest,
00:14:51.160the, well, to come back specifically to Canada, Canada has set out these emissions guidelines.
00:15:01.160Ever since 1998, Canada has not hit one of its objectives for emissions, not one.
00:15:08.160It's now looking like it's trying to double down on it and keep the myth that you can stabilize or reduce your emissions through decarbonized oil.
00:15:20.160The costs of this proposal, even though it's been looked at by industry as a viable option.
00:15:30.160It's not the question of whether or not we can do this.
00:15:34.160Engineers in Canada are more than capable of doing it.
00:15:37.160Although the technology is unproven and the largest comparable facility in Australia that's run by Chevron has never come even close to meeting its requirements.
00:15:48.160And so assuming it works, assuming that you spend that 16 to $24 billion and assuming that there's a market for that oil at the other end,
00:16:00.160you still only bring down your emissions in Canada by less than 2%.
00:16:35.160It's a constant negative impact, not only in operations, but on your pre-capital costs and on the penalty imposes on the pipeliners and the oil producers who are going to have to pay for this.
00:16:49.160Now, the part that he's leaving out is that it is not the pipeliners and the producers and the federal government that's going to pay for this.
00:17:00.160This is going to probably land very heavily on the Alberta taxpayers to the tune of between maybe $500 million to $1.4 billion a year to operate that facility.
00:17:15.160Let's talk about that because there is a sort of an understanding, I think, that Premier Smith has, or hope perhaps I should call it, that we will be able to develop the oil producing industry and have pipelines going to the coast and lift the tanker ban as long as we can decarbonize the oil in the manner prescribed.
00:17:43.160Now, at the price of the decarbonized oil, nobody's going to want to buy it.
00:17:48.160We're not going to be able to afford to use it even locally.
00:18:08.160Well, the Parliamentary Committee didn't ask me one question.
00:18:12.160The Conservative members did, but the Liberal members did not rise to the occasion.
00:18:18.160So, quite frankly, I know what Honorable David Bextie and his Tory colleagues thought of it because they were asking me questions where I used these numbers.
00:18:32.160So, I don't know what they're thinking about.
00:18:36.160As for Premier Smith, you know, I really congratulate her for trying so hard to find outcome.
00:18:42.160When she emerged from the Premier's meeting in January in Saskatoon and came up with the idea of a grand bargain, where a new pipeline could theoretically pay for this and be a grand bargain,
00:18:56.160which meets the requirements of the federal government and Alberta's expectations for oil export and development.
00:19:03.160My only comment is, is that if you're going to spend between 16 and 24 billion dollars, you need to do something more than a back of the envelope calculation.
00:19:13.160And that if, in fact, the federal government is presenting that as an alternative for Alberta, I think Alberta government needs to look at this very, very carefully.
00:19:24.160So, the parliamentary committee, basically, you've had a chance to get the message out to more people on this interview than probably you have through the parliamentary committee because the Liberals just wouldn't pick up the ball and play.
00:19:40.160But, if the grand bargain doesn't happen, what is the future of the oil and gas industry in Alberta?
00:19:57.160Well, if you look at and you listen to what, it's interesting to listen to the Prime Minister say that they've set up this new major projects office that's going to accelerate these projects.
00:20:13.160Well, that may be true. I mean, I don't think it's going to be that effective.
00:20:18.160They're paying people very significant amounts of money to make it work. I hope it does.
00:20:24.160But, in effect, they're trying to countermand their own regulatory process and end run it.
00:20:31.160That's something that I find to be unique in any parliamentary democracy.
00:20:36.160If your legislative base is so formidable, that is preventing things as has been documented,
00:20:43.160to the extent of the billions of dollars that have left Canada,
00:20:48.160if you would think it would be reasonable to change that legislative base rather than and run it.
00:20:57.160So that's what we've chosen to do. But to come to your point,
00:21:01.160if in fact these projects are going to be built, they're not going to be built by the federal government.
00:21:10.160They may be funded in part by it, but they'll be built by industry and by private capital.
00:21:17.160And when you listen to the presidents of TransCanada and Enbridge,
00:21:22.160they're giving messages very clearly that they're directing their money for capital investment into the United States.
00:21:30.160Now, they may be, in fact, looking at a potential project in Canada after the cancellation of Gateway.
00:21:37.160I mean, Enbridge had to eat, it's been reported, something like a billion dollars
00:21:43.160when cabinet unilaterally overruled the National Energy Board approval for Gateway.
00:21:49.160If you had to be a producer in a capital markets, as I said to the committee,
00:21:56.160would you be interested in investing in Canada when A, you had to build a $16 billion decarbonization project,
00:22:05.160then face $20 to $30 to $40 billion in pipeline costs for which you would have to go through
00:22:12.160what's called an expedited regulatory review process when you've got Aboriginal communities
00:22:20.160and the premier of British Columbia in completely opposing those ideas,
00:22:28.160and a tanker ban on the West Coast, which would allow you to transport that oil to market.
00:22:34.160Those are tremendously formidable barriers.
00:22:38.160And it explains why TransCanada, or TC Energy, excuse me, and Enbridge,
00:22:45.160the presidents are making very clear statements saying,
00:22:48.160our money, our capital investments is going to the United States.
00:22:51.160Well, I know some people are watching this and they're saying, you know, this is all very interesting.
00:22:55.160But Mr. Carney said he was going to lift the emissions cap, so surely we don't have to do this anymore.
00:23:01.160Well, he said that they wouldn't need it if they did all of the other things.
00:23:42.160We've got the Trans Mountain Expansion Line out to the coast in BC.
00:23:47.160If it gets to be that Alberta oil becomes so expensive and we can't even afford it, never mind sell it to anybody else.
00:23:57.160The industry goes down and we start reversing the flow and bringing imported oil in just like they do from Eastern Canada and bringing it up to Alberta through the TMX.
00:24:13.160But, you know, Trans Mountain represents a very viable alternative for Canada to very quickly increase its export oil by simply optimizing that line like Enbridge and TC Energy are presently doing.