After such a miserable experience with our last national energy "strategy," do we really need to go down that road again?
It seems, according to some, that Canada is at another crossroads in its economic and industrial history.
Oilsands production is surging, and shale gas and light tight oil developments are reshaping the North American energy landscape. The United States, since the beginning considered Canada's number one market for energy exports, is quickly gaining strength as a producer and will surely need less of what we sell.
The energy/economic hierarchy, from Prime Minister Stephen Harper to Alberta Premier Alison Redford through to the western Canadian oil and gas leadership cadre led by David Collyer, president of the Canadian Association of Petroleum Producers, have seen the writing on the wall and decided that Canada must tap new markets for its oil and gas output. Fair enough.
But others in the industry, myself included, aren't sure how this should be accomplished. Having cut my teeth covering the Canadian oil and gas business in the dark days of the National Energy Program (fallout from that ill-advised national energy "strategy," in fact, cost me my first job), I am wary of any plan from any government to formalize and put into policy the direction of the industry. Like Darren Gee, president of Peyto Exploration & Development, or Brian McLachlan, president of Yoho Resources, I get skittish whenever governments at any level start poking about in the business of business, beyond setting the broad fiscal and regulatory parameters within which business must operate.
Oilweek readers appear to have similar views. An online poll at oilweek.com that asked the question "Do you believe Canada needs a national energy strategy?" uncovered a widespread unease with such a move, perhaps a reflection of long-held anger over the National Energy Program. More than 75 per cent of those who responded to the question answered no; a little over 18 per cent said yes, and the rest were undecided.
I think part of the unease and the mistrust stems from the fact that as yet, nobody has outlined exactly what a national energy strategy would look like. Would it be a series of tax measures and fiscal incentives, like the NEP, designed to steer the marketing of oil and gas reserves in a certain direction? Could it be a series of guidelines, policies or regulatory fiats aimed at encouraging the sale of oil to China or liquefied natural gas to Japan over the free market movement of commodities to whichever market appears the most attractive to producers? Will it entail the creation of a "Canadian Energy Board" (reminiscent of the recently dismantled Canadian Wheat Board) mandated to sell the oil and gas commodities that Canadian producers have been free to sell on their own, without government intervention on prices or volumes, for the past 30 years?
Although I agree with Harper and Redford and Collyer that Canada needs to diversify its energy markets, I'm not convinced we need a national energy strategy to accomplish that goal. Already, market forces are at work to tap into lucrative—for now—Asian markets for crude oil and natural gas. Enbridge and Kinder Morgan each have plans to increase the flow of diluted bitumen from Alberta to the west coast, where it would be loaded on tankers and sold into Pacific Rim markets. Shell Canada recently contracted TransCanada to build its "Coastal GasLink" pipeline to Kitimat to facilitate the long-term export of liquefied natural gas to the same markets, where natural gas, still linked to crude oil, fetches a much higher price than in North America.
A much better "strategy" for governments at all levels would be to implement a structure that would smooth such export diversification efforts already being undertaken by Enbridge, Kinder Morgan and Shell Canada. We don't need new policy to make that happen, just smart and visionary politicians.