Western Standard - HANNAFORD： Ottawa’s energy rules are crippling the West

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00:00:30.000 Good evening, Western Standard viewers, and welcome to Hannaford, a weekly politics show.

00:00:51.740 It is Thursday, November the 13th.

00:00:54.840 Here is a factoid for you.

00:00:57.220 The government of Canada wants Alberta's oil sands companies to produce oil without increasing the amount of carbon in the atmosphere.

00:01:06.200 You probably knew that, and you knew it as net-zero emissions, and the so-called emissions cap.

00:01:12.400 This costs a lot of money, and is a competitive handicap for Alberta oil.

00:01:17.460 A severe one, actually.

00:01:19.780 In 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.

00:01:31.960 However, it's not the same for Eastern Canadian refineries importing oil from other countries.

00:01:39.920 There is no equivalent added cost.

00:01:43.520 I find this unbelievable, but apparently it is so.

00:01:47.240 There are two energy economies in Canada, one based on expensive oil out west, the other on cheap oil.

00:01:55.160 With me today is Dr. Ron Wallace, who served on the old National Energy Board that the Liberals got rid of, by proposing to modernize it.

00:02:06.640 You're the first professional ecologist appointed to the National Energy Board.

00:02:12.900 You have a long career in energy regulation, and in fact, last month, Dr. Wallace,

00:02:18.900 you were testifying to the Parliamentary Energy Standing Committee on Energy about this.

00:02:25.160 Welcome, Ron.

00:02:26.300 Thank you.

00:02:27.600 Ron, you know, this sounds outrageous, but I'm drawing my understanding of it from an article that you published recently in C2C Journal.

00:02:42.780 And that said, you laid it out all in broad terms.

00:02:49.240 They don't pay a premium in the east to import oil.

00:02:52.880 We pay a premium in the west to produce it.

00:02:57.580 What is going on here?

00:02:59.580 Well, 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.

00:03:12.560 It wasn't something that was raised during the election, but it's come up since then.

00:03:19.580 And I have some figures here.

00:03:23.220 It's that since 1988, marine terminals along the St. Lawrence have seen imports of foreign oil valued at more than $228 billion.

00:03:35.380 Yes.

00:03:36.380 And that's not including the Irving oil refinery in New Brunswick, which between 1988 and 2020 imported $136 billion worth of oil.

00:03:51.980 Now, there's two things here.

00:03:55.020 First, none of that oil is, quote, decarbonized.

00:03:58.700 It's originating from the United States.

00:04:00.760 Can you just explain?

00:04:01.560 I mean, I don't think people necessarily believe me.

00:04:04.980 Decarbonized oil, what makes oil attractive is carbon.

00:04:08.840 So, like dehydrated water.

00:04:10.440 What do we mean?

00:04:12.420 Dehydrated water is a good example.

00:04:14.940 What they're saying is that this is an attempt to limit the emissions that are going to the atmosphere in Canada.

00:04:23.600 And so, the idea behind decarbonized oil is that the emissions from oil sands production will be captured and sequestered in the ground.

00:04:37.920 And 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.

00:04:56.740 And 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.

00:05:11.740 But this happens under very, very high pressure, requires pipe manufactured to extreme specifications, and costs a hell of a lot of money.

00:05:24.080 It's a great deal of money.

00:05:25.580 It'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.

00:05:34.980 For 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.

00:05:53.620 Now, they're already doing that in Weyburn, Saskatchewan, I believe, and not Pathways.

00:05:57.300 Well, that's a different situation.

00:06:00.420 In 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.

00:06:15.580 And they've produced a lot of oil by doing this.

00:06:18.440 That wouldn't normally be productive.

00:06:21.080 Now, the government doesn't like this because you're adding oil to the equation.

00:06:25.480 And 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.

00:06:48.260 I see.

00:06:48.780 So they're two different situations.

00:06:52.740 So to be clear, Weyburn demonstrates that you can compress carbon dioxide and force it underground.

00:06:59.700 And underground and produce oil.

00:07:01.700 But 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…

00:07:14.560 Very much so.

00:07:15.180 Well, the major difference between what's being proposed at Pathways is there is no oil recovery.

00:07:21.700 You're just simply taking all that carbon from those emissions, pumping it underground, it's gone.

00:07:27.340 In Weyburn, at least, their cost is being offset by the production of the oil.

00:07:32.140 So when you build a plant that's going to cost $16 billion to $24 billion, you then have to operate that facility.

00:07:44.160 And the operating costs are not covered in that $16 billion.

00:07:48.600 It's estimated that those operating costs could be as much as $1.4 billion a year every year.

00:07:54.720 So what would that do to the cost of the oil that's produced that way?

00:07:58.360 Well, precisely.

00:07:59.420 So when you're…

00:08:00.540 We're an export market.

00:08:01.220 We've got to sell against the world.

00:08:02.680 We've got to sell against the world.

00:08:04.320 Nobody else is doing this.

00:08:05.700 Now, let's just start a little bit further back.

00:08:08.760 This 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.

00:08:19.540 Not one.

00:08:20.060 Canada is an outlier in this, as I explained to the Standing Committee to the House.

00:08:26.700 Not even Norway, which is pursuing injection facilities for carbon to inject the emissions underground, is doing that for its oil industry.

00:08:38.720 It has a major facility that's under production, but that's for cement production from Germany.

00:08:45.640 So that's the starting point here.

00:08:48.080 When you move past that discussion, you move into, well, where will you take emissions?

00:08:55.260 Well, 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.

00:09:11.200 They're specifically targeting, in fact, the oil sands before that oil can be released.

00:09:17.860 Now, 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.

00:09:35.420 Well, I won't ask you to go out on a limb and say how much per barrel this could add, because who knows?

00:09:43.220 Nobody knows.

00:09:43.960 Well, nobody knows.

00:09:45.240 It's estimated between $100 to $200.

00:09:49.540 Okay.

00:09:49.840 Well, oil is about $57 a barrel when I looked this morning.

00:09:53.760 It's down a lot.

00:09:54.740 So who is going to want to buy Alberto oil at $57 plus?

00:09:59.880 Well, who could afford to produce that oil at those prices?

00:10:04.420 That's the question.

00:10:05.320 And carry that cost.

00:10:06.420 And so, you know, the government loves talking about stranded assets.

00:10:12.480 If we're going to get out of oil, all of these facilities will be stranded assets.

00:10:16.720 Well, 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.

00:10:28.240 In fact, it's a very critical price point right now for all these plants.

00:10:34.120 So how does this affect Canada?

00:10:37.100 Well, 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.

00:10:51.660 Say that again. 0.71

00:10:52.940 How much?

00:10:53.460 $680 billion.

00:10:55.480 $680 billion.

00:10:58.360 Nearly three quarters of a trillion dollars.

00:11:02.440 Indeed.

00:11:03.000 And that's just capital that's left by projects that haven't been built.

00:11:09.500 If 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.

00:11:26.600 I mean, of those imports to eastern Canada, 72% originating in the United States.

00:11:34.480 They have none of these penalties.

00:11:36.000 So this idea that Canada is going to seek out markets because it has decarbonized oil, the question is, who's asking for that oil?

00:11:46.240 No one that I'm aware of, no one is saying we need to have a premium for decarbonized oil over what's coming in from Venezuela.

00:11:55.320 So let me ask you this, Dr. Wallace.

00:11:57.320 I 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?

00:12:06.400 We're talking about the smoke-filled room, the back room, where everybody's sitting around.

00:12:12.640 How 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?

00:12:25.080 Well, as you said, most people would say, no, you never get away with that, but they're getting away with it.

00:12:28.840 Well, 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.

00:12:38.120 The 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.

00:12:53.480 So a very interesting thing happened this week.

00:12:57.640 Bill 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.

00:13:14.080 Now, this is a position that's been taken by scientists and ignored by the media largely for the last 20 years.

00:13:20.160 This 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.

00:13:36.160 That is something that's putting the Kearney government and the Canadian government in a very difficult position.

00:13:43.160 The 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.

00:13:57.160 Just saying, look, we know that's now wrong and now we're moving into a situation to say we have to focus on adaptation.

00:14:05.160 Well, you see, I mean, Bill Gates comes out, Bill Gates has been a very strong proponent of cutting carbon emissions to fight global warming.

00:14:13.160 He has now recanted.

00:14:15.160 Before he recanted, he was very quotable as long as he said that.

00:14:19.160 Right.

00:14:20.160 Now, of course, everybody's, oh, well, you know, Bill Gates fit a little old and hard and maybe he's losing his, losing his grip.

00:14:25.160 Well, nobody's really picking up on that.

00:14:28.160 I mean, I think that's highly significant.

00:14:31.160 Well, it's tremendously significant.

00:14:33.160 And the fact that he decided to make that announcement just before COP30.

00:14:37.160 And, you know, it is almost predictable.

00:14:41.160 The UN conferences, this is the 30th conference now.

00:14:45.160 And aside from the costs of jetting all these people to the Brazilian rainforest, 0.99

00:14:51.160 the, well, to come back specifically to Canada, Canada has set out these emissions guidelines.

00:15:01.160 Ever since 1998, Canada has not hit one of its objectives for emissions, not one.

00:15:08.160 It'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.

00:15:20.160 The costs of this proposal, even though it's been looked at by industry as a viable option.

00:15:30.160 It's not the question of whether or not we can do this.

00:15:34.160 Engineers in Canada are more than capable of doing it.

00:15:37.160 Although 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.

00:15:48.160 And 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,

00:16:00.160 you still only bring down your emissions in Canada by less than 2%.

00:16:06.160 Oh, that happens.

00:16:07.160 Really?

00:16:08.160 Less than 2%.

00:16:09.160 Yes.

00:16:10.160 You do all that.

00:16:11.160 Because all the rest of us are driving our cars and we're breathing and exhaling.

00:16:15.160 Yeah.

00:16:16.160 Well, and the comment I heard from the prime minister that made me laugh that he said,

00:16:20.160 you have to realize that this decarbonized oil is going to generate enormous jobs and enormous industries in Canada.

00:16:27.160 Well, it will.

00:16:28.160 It's not going to be, if you're going to spend $16 billion, you're going to employ a lot of people.

00:16:33.160 The point is, it never makes money.

00:16:35.160 It'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.

00:16:49.160 Now, 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.

00:17:00.160 This 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.

00:17:14.160 Well, okay.

00:17:15.160 Let'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.

00:17:43.160 Now, at the price of the decarbonized oil, nobody's going to want to buy it.

00:17:48.160 We're not going to be able to afford to use it even locally.

00:17:52.160 Or sell it.

00:17:53.160 Or sell it.

00:17:54.160 So, two questions.

00:17:57.160 First of all is, when you laid this out for the Parliamentary Committee, what did they make of it?

00:18:03.160 And the second question is, do you think this grand bargain has got lengths?

00:18:07.160 Yeah.

00:18:08.160 Well, the Parliamentary Committee didn't ask me one question.

00:18:12.160 The Conservative members did, but the Liberal members did not rise to the occasion.

00:18:18.160 So, 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.

00:18:30.160 The Liberals, not so much.

00:18:32.160 So, I don't know what they're thinking about.

00:18:36.160 As for Premier Smith, you know, I really congratulate her for trying so hard to find outcome.

00:18:42.160 When 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,

00:18:56.160 which meets the requirements of the federal government and Alberta's expectations for oil export and development.

00:19:03.160 My 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.

00:19:13.160 And 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.

00:19:24.160 So, 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.

00:19:40.160 But, if the grand bargain doesn't happen, what is the future of the oil and gas industry in Alberta?

00:19:57.160 Well, 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.

00:20:13.160 Well, that may be true. I mean, I don't think it's going to be that effective.

00:20:18.160 They're paying people very significant amounts of money to make it work. I hope it does.

00:20:24.160 But, in effect, they're trying to countermand their own regulatory process and end run it.

00:20:31.160 That's something that I find to be unique in any parliamentary democracy.

00:20:36.160 If your legislative base is so formidable, that is preventing things as has been documented,

00:20:43.160 to the extent of the billions of dollars that have left Canada,

00:20:48.160 if you would think it would be reasonable to change that legislative base rather than and run it.

00:20:57.160 So that's what we've chosen to do. But to come to your point,

00:21:01.160 if in fact these projects are going to be built, they're not going to be built by the federal government.

00:21:10.160 They may be funded in part by it, but they'll be built by industry and by private capital.

00:21:17.160 And when you listen to the presidents of TransCanada and Enbridge,

00:21:22.160 they're giving messages very clearly that they're directing their money for capital investment into the United States.

00:21:30.160 Now, they may be, in fact, looking at a potential project in Canada after the cancellation of Gateway.

00:21:37.160 I mean, Enbridge had to eat, it's been reported, something like a billion dollars

00:21:43.160 when cabinet unilaterally overruled the National Energy Board approval for Gateway.

00:21:49.160 If you had to be a producer in a capital markets, as I said to the committee,

00:21:56.160 would you be interested in investing in Canada when A, you had to build a $16 billion decarbonization project,

00:22:05.160 then face $20 to $30 to $40 billion in pipeline costs for which you would have to go through

00:22:12.160 what's called an expedited regulatory review process when you've got Aboriginal communities

00:22:20.160 and the premier of British Columbia in completely opposing those ideas,

00:22:28.160 and a tanker ban on the West Coast, which would allow you to transport that oil to market.

00:22:34.160 Those are tremendously formidable barriers.

00:22:38.160 And it explains why TransCanada, or TC Energy, excuse me, and Enbridge,

00:22:45.160 the presidents are making very clear statements saying,

00:22:48.160 our money, our capital investments is going to the United States.

00:22:51.160 Well, I know some people are watching this and they're saying, you know, this is all very interesting.

00:22:55.160 But Mr. Carney said he was going to lift the emissions cap, so surely we don't have to do this anymore.

00:23:01.160 Well, he said that they wouldn't need it if they did all of the other things.

00:23:05.160 All these things.

00:23:06.160 All of the other things, which is the current suite of emissions and climate regulations.

00:23:16.160 You've got to understand that there's the clean fuel regulations.

00:23:20.160 This is the tanker ban.

00:23:22.160 The list of regulations goes on and on.

00:23:25.160 What he's saying is that if we do all those things, then you won't need an emissions cap.

00:23:29.160 Well, it's the same thing.

00:23:30.160 Yes.

00:23:31.160 It's the same thing, only different.

00:23:33.160 We're just about out of time, Dr. Wallace.

00:23:35.160 But let me pitch something that's just really crazy because all of this is crazy.

00:23:40.160 So I can be crazy, too.

00:23:42.160 We've got the Trans Mountain Expansion Line out to the coast in BC.

00:23:47.160 If it gets to be that Alberta oil becomes so expensive and we can't even afford it, never mind sell it to anybody else.

00:23:57.160 The 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.

00:24:07.160 What do you think?

00:24:08.160 Is that crazy?

00:24:09.160 Well, you'd have to reverse the line.

00:24:11.160 That's a very difficult situation.

00:24:13.160 But, 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.

00:24:30.160 You don't need a new pipeline.

00:24:32.160 You can optimize existing ones and get it there.

00:24:36.160 Now, if you've got the only way you can optimize those lines is to buy, quote, decarbonized oil, then you've got a very difficult process.

00:24:47.160 Dr. Wallace, it's a funny world we live in, except it's not really that funny.

00:24:53.160 But that was an amazing article.

00:24:55.160 And I think you're one of the first people to bring it to light.

00:24:58.160 Thank you for doing that.

00:24:59.160 And I think we may be having you back to talk about this as things develop.

00:25:04.160 So thanks for coming on the show.

00:25:05.160 Thanks for having me, Nigel.

00:25:07.160 For the Western Standard, I'm Nigel Hannaford.

Western Standard - November 18, 2025

HANNAFORD： Ottawa’s energy rules are crippling the West

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