Energy: Oil&Gas and Green transition. Disputed pipelines raises tensions in US-Canada bilateral relations. A burden only for Alberta?
Interview with Claudia Cattaneo.
One of Canada's best-known energy experts, Claudia has been a journalist and “oil & gas” commentator for 40 years. After her retirement, she worked as a consultant to the government of the Province of Alberta in the launch of the Canadian Energy Center. The Centro Studi Italia-Canada met her to analyze the Canadian energy scenario, the transition underway and the internal and geopolitical challenges to be faced.
Nadia Deisori*,
Journalist and Digital Human consultant
In this article >>>
- Energy: what happens between Canada and the United States?
- Interview with Claudia Cattaneo, oil & gas expert
- The importance of the energy sector in the Canadian economy
- The Keystone XL pipeline
- Michigan and Canada end up in court for Line 5
- A low-carbon future for Alberta
- Who is Claudia Cattaneo
Energy: what happens between Canada and the United States?
How long will fossil fuels last? After the Trump era, are we ready for an action plan for the energy transition?
After rejoining the Paris Agrrement, Biden's United States opened the door of international relations to the issue of sustainability. On this basis, the comparison with the “neighboring” Canada and the future of two important oil infrastructures was also activated.
On the one hand, President Biden blocked the Canada-US Keystone XL pipeline project. On the other hand, the governor of Michigan would like to revoke the concession dating back to '53 which guaranteed the passage of the double Line 5 pipeline of the Canadian Elbridge.
Keystone pipeline route. Source: Meclee, CC BY-SA 3.0 via Wikimedia Commons
The shutdown of these projects is advocated by environmentalists, whose lobby contributed to the election of both Biden and Trudeau, and supported by representatives of indigenous peoples on whose territories the oil infrastructure is impacting.
The oil and mining lobbies are pushing for other solutions, shocked by the one-sidedness of US decisions.
There are those who fear a global energy crisis and an oil shortage that would have repercussions in the first place on the local populations they want to protect. For example, higher fuel prices and greater social disparity caused by the employment crisis.
Source: U.S. Energy Information Administration
Canada appears to be paying the highest price for these moves.
However, the US energy policy has fragile foundations.
It is true that American imports from OPEC countries are the lowest since 1973, but the US energy independence project is also based on having entrusted Canada with the role of a reliable exporter that contributes to stabilizing oil prices. The share of imports from Canada has in fact almost doubled in the last 10 years.
Let's go back to the original question. How long will fossil fuels last?
If the energy transition is not yet fully underway, how will an energy crisis be avoided? And if it is not possible to eliminate fossil fuels, what are the solutions at the moment to reduce at least their environmental impact?
Finally, how will Canada manage to consolidate its role as a leader in the fight against climate change and as an oil exporter at the same time?
With Claudia Cattaneo, one of the best-known energy experts in Canada, we explored the complex Canadian energy scenario in the light of relations with the United States.
Italian journalist raised in Canada, she has collaborated for over 40 years with the most important Canadian newspapers. A regular guest on television and radio programs, Claudia is one of the few women to deal with oil issue at this level. After finishing her journalistic career, she accepted the proposal of the Alberta government and was responsible for developing the strategy of the provincial agency Canadian Energy Center and bringing the topic of energy back to the center of public and political debate.
Interview with Claudia Cattaneo, oil & gas expert
You were born and raised in Italy, but you studied in Toronto and Montreal. In Canada you found your world, journalism, in a sector - “oil & gas” - in which there were and are very few female reporters. How were you welcomed?
I worked as a journalist for about 40 years, including 25 specializing in energy.
I recently retired from full-time work, although I continue to use my writing skills and expertise for public service.
My career was unconventional.
Early in my journalism career in Canada, discrimination against Italian immigrants was rampant. In journalism school, I was strongly advised to anglicize my name (which I refused to do) to be more acceptable to employers and readers.
Top media organizations wouldn’t hire me because I was too new to Canada. When I finally landed my first full-time job, I was deployed to cover junior beats focused on immigrant communities. I often felt unsupported.
I overcame those challenges by working hard, studying hard and becoming exceptionally fluent in Canada’s official languages.
My career improved dramatically when I started specializing in business and finance – beats that required more formal education.
I was one of the first women to cover the Canadian oil and gas sector, an industry that was predominantly male. I loved it because of its technical, environmental and geopolitical complexities.
I did my best to cover it thoroughly and accurately. Eventually, persistence paid off.
I received many national journalism awards, including an Oustanding Achievement Award from my Canadian journalism peers after I retired.
Can you help us understand the importance of the energy sector in the Canadian economy?
The Canadian energy sector is as essential to Canada as tourism is to Italy.
Canadian oil and gas contributed $105 billion to Canada’s GDP in 2020, supported more than 500,000 jobs in 2019 and provided $10 billion in average annual revenue to governments in 2019. Natural gas and oil are Canada’s biggest export commodities by value.
The industry is concentrated in Alberta, where I live. About 70 per cent of Canada’s oil is produced from the oilsands, which are located in the Fort McMurray region in the province’s northeast corner. The oilsands are immense.
The deposits contain so much oil mixed with sand that they account for 97 per cent of Canada’s oil reserves. They are the world’s third largest oil deposits, next to those in Venezuela and in Saudi Arabia.
The Canadian oilsands boom coincided with the decline of Venezuela’s oil industry under Hugo Chavez. Big companies that developed heavy oil in Venezuela’s Orinoco belt fled to Alberta, which has similar deposits, but which are harder to produce because they’re located in a remote, cold area.
The United States now imports more oil from Canada than from any other country.
Those imports have increased in recent years because they are a secure source and because oil production in Mexico and Venezuela has declined dramatically.
Canada is highly dependent on the U.S. market, too.
Some 98% of Canadian oil is exported to the U.S. because that’s where our pipelines go. Canadian producers have been trying for decades to reduce their dependence on the U.S., where Canadian oil sells at a discount, by building pipelines to the West and East coasts, but have run into environmental lobby opposition. The Energy East and Northern Gateway project have been cancelled.
Canada’s oil is vital to the world.
Canada is the world’s fourth largest oil producer, after the United States, Russia and Saudi Arabia. Canada produces more than 5 million barrels a day.
Canada is a leading country in environmental sustainability. Considering the dispute that the country is pitting against the United States it would seem the opposite. Are the two facing each other on a different energy model or is there something else that pushes American politics to cut cleanly and without diplomacy the projects that see it as a partner with its Canadian neighbor?
Canada finds itself in an odd predicament – it’s one of the world’s most responsible producers of oil and gas, and yet it’s been relentlessly demonized by the environmental lobby, particularly groups based in the United States.
While Canadian oilsands operations were initially more carbon intensive than other oil sources, the industry has been reducing carbon emissions by implementing new technologies.
The sector spends more on clean technology than all other Canadian industries combined – or 75% out of $1.4 billion a year, according to the Clean Resource Innovation Network. Canada’s oil sands per barrel greenhouse gas emissions have fallen 32 per cent since 1990, according to data from the Government of Canada’s 2019 National Inventory Report.
But the U.S.-based environmental lobby doesn’t want cleaner fossil fuel. It wants no fossil fuel. It wants the oilsands to ‘stay in the ground.’ For more than a dozen years, it has made the Canadian oilsands a top target of its off-oil campaigns, resulting in the cancellation of major pipeline projects and the loss of tens of thousands of Canadian jobs.
The Keystone XL and Line 5 campaigns are just the latest examples. U.S. President Joe Biden cancelled the Keystone XL pipeline to please his environmental constituency, which helped elect him. He’s ignoring the Line 5 debacle, which is ongoing before the courts.
The Keystone XL pipeline
The Keystone XL pipeline has long been a subject of contention. Blocked by the Obama administration. Then restarted by Trump and finally stopped again by President Biden. Can you help us understand better what the story of this project is?
The Keystone XL project was proposed a dozen years ago by TC Energy, one of Canada’s largest energy companies, to transport oil from Alberta’s oilsands to refineries in the U.S. Gulf Coast.
The pipeline would have helped make the U.S. energy secure for decades and would have resulted in thousands of jobs in Canada and the U.S. The company spent billions on U.S. regulatory reviews and met all requirements.
But the U.S. environmental lobby rallied against it to strand Canada’s oilsands. President Obama refused to give it a permit to demonstrate his commitment to combat climate change. President Trump reversed that decision and allowed the pipeline to go ahead. President Biden cancelled it again.
Lawsuits have already been filed against Biden’s decisions. In my view, it’s unlikely the Keystone pipeline will be re-started. No private company can withstand such political risk, not to mention the attacks to its reputation and the financial losses.
In 2021, the word pipeline raises questions about governments' future energy plans and the fuels on which they will be based. What are the concerns of indigenous communities and environmentalists? Are pipelines in general and this pipeline in particular harmful to the environment?
Environmentalists want fossil fuels to be phased out today. They have targeted the oilsands because they believe they would lock us into fossil fuels for too many more decades.
Indigenous communities are divided.
Some are opposed to fossil fuel development. But a lot want a piece of the energy economy. Several Canadian First Nations are bidding to buy the Trans Mountain pipeline from Alberta to Vancouver, which is owned by the Canadian government and is being expanded. In the oilsands, there are hundreds of Indigenous businesses that provide services to oilsands companies.
While the campaign against pipelines has been effective in stalling the growth of the oilsands, it has resulted in more oil being transported on trains, which is far more damaging to the environment.
Construction company Canada's TC Energy Corp would have committed to using only renewable energy to power the project and eliminate all greenhouse gas emissions from the operations by 2030. Can you confirm this?
The Keystone XL pipeline would have used the latest technology to reduce environmental impacts.
In January, the company announced that the project would have had net zero emissions at startup in 2023, and that its operations would be fully powered by renewable energy sources no later than 2030.
Biden rejected it any way.
The critical issue relating to the revocation of Keystone permits is also the impact on employment. According to reports from the construction company, nearly 1000 people will lose their jobs as a result of this decision, not counting the jobs that could have been produced with the project at full capacity. On the other hand, there are those who argue that other “greener” projects could absorb these workers. What can you tell us about it?
The Keystone XL cancellation immediately resulted in about 1,000 people getting laid off. But the impact of these ongoing energy project cancellations has been far reaching.
Environmental campaigns have shut down or forced the delay of so many oil and gas pipelines and liquefied natural gas projects, and the Canadian federal government has made regulatory requirements so stringent, that it’s almost impossible for an energy project to be built in Canada today.
Alberta’s economy, which had been the engine of Canada’s economy, has been in a deep recession since 2015. Job losses are in the tens of thousands.
Downtown Calgary’s towers are one-third empty. Our young people are leaving because they can’t find work. Almost all foreign oil companies have left. Some people haven’t worked in years. Much promoted green jobs have not materialized. In addition, they cannot replace oil and gas jobs because they require different skills.
In my view, one of the biggest failures of policies to transition to green energy is that they don’t offer viable plans to address the immediate impacts of such sweeping policies to transition to new energy systems, which take a long time.
Michigan and Canada end up in court for Line 5
Blocking the Keystone pipeline is not the only obstacle between the “energy relations” between the US and Canada. We refer in particular to the Line 5 pipeline which acts as a key energy supplier in Michigan, Alberta, Ontario and Québec and which crosses one of the most environmentally sensitive areas in the world, the Great Lakes.
Built during the Eisenhower administration in 1953, the two Line 5 pipelines are owned by the Canadian company Enbridge, Inc. and have been involved in some incidents in recent years.
They are currently at the center of a legal battle with the US administration. Governor Gretchen Whitmer of Michigan was elected with a promise to shut down Line 5 and in November she notified the Canadian company of the lifting of the easement that allowed it to manage the two pipelines in the Strait of Mackinac, which connects Lake Michigan and the Lake Huron. The accusation is of repeated violations of the terms and conditions of the easements and the risk of leaks due to an infrastructure considered obsolete that makes people fear the worst for the environment and local populations. In 2016, Dave Schwab, a researcher at the University of Michigan Water Center, simulated 840 possible spills from Line 5 near the Mackinac Strait.
Perché la pipeline Why is Line 5 so important to Canada and what does it intend to do to eliminate the double pipeline vulnerability? What would be the effects of a possible energy crisis following the shutdown of this section?
The shutdown of Line 5 would be catastrophic for Canada.
The pipeline transports oil from Alberta’s oilsands and supplies half the fuel used in Ontario and Quebec.
The company that owns it, Enbridge, has proposed to build a $500 million underground tunnel to house Line 5 at the Straits of Mackinac. The dispute remains before the courts, while Biden has remained silent.
Enbridge refused to shut down Line 5 unless it’s ordered to do so by a judge.
If the pipeline is shut down, it’s likely that oil would be transported on trains and trucks, but fuel prices in Eastern Canada would soar and alternative supplies would have to be found.
Infographic source: enbridge.com
A low-carbon future for Alberta
According to Energy Minster Sonya Savage, your strategy for the Canadian Energy Center will help "the fight against lies and myths being spread about Alberta's energy industry".
The provincial oil industry is in fact accused of being responsible for most of Canada's emissions. According to the Alberta Energy Regulator, the tar sands (a mix of clay, sand, water and bitumen) of the western Canadian province are one of the largest crude oil fields in the world, with more than 165 billion barrels of bitumen in the ground. However, the dense and viscous oil extracted from the so-called oil sands has very high production costs and environmental impact in terms of enormous quantities of Co2.
What lies was the minister referring to? Do you think there is a media war between supporters of fossil fuels and green energy?
The campaign against the oilsands has involved: raising the negatives, raising the costs, slowing down and stopping infrastructure, enrolling key decision makers. There have been many attempts to come to a compromise with the environmental lobby, but the anti-oilsands campaign has only expanded. The original strategy is public and is widely available. Here it is.
Does the tension between Canada and the United States and the collapse in oil prices risk severely damaging the economy of the Canadian province, including foreign companies active in Alberta?
As I said, Alberta’s economy has been in deep recession for the past six years and continues to struggle to diversify its economy.
Almost all foreign companies involved in oilsands extraction have left, including Italian companies.
How can we reconcile an oil and gas industry worth 2 points of national GDP and the future of Alberta with a low-carbon Canada as proposed by PM Trudeau?
Prime Minister Trudeau plans to meet Canada’s greenhouse gas reduction commitments through such measures as punitive carbon taxes, stringent regulation of oil and gas production, and financial support for the transition to a greener economy. A federal election is expected in the coming months.
Who is Claudia Cattaneo
Claudia Cattaneo worked as a journalist at some of Canada's largest daily newspapers for nearly 40 years. Based in Calgary, she retired in May, 2018, as the Western Business Columnist at the National Post. Claudia also contributed to the FP Magazine and was a regular commentator on energy on TV and radio programs. Since her retirement from journalism, Claudia led development of the strategy, and participated in the startup, of the Canadian Energy Centre, a new provincial corporation dedicated to raising understanding of the value of Canada's energy sector. Claudia previously served as the Financial Post's Calgary Bureau Chief, senior business writer at the Calgary Herald specializing in finance and transportation, as well as a writer at the Montreal Gazette, the Toronto Star and the Italian-language Corriere Canadese. Born and raised in the Valle d'Aosta region of Northern Italy, Claudia moved to Canada as a teenager.
Cover: Prime Minister Justin Trudeau and the President of the United States, Joe Biden. Source: pm.gc.ca
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