Volatility is the new normal for Canadian oil and gas. Producers are eagerly awaiting construction of the stalled Trans Mountain pipeline expansion. LNG Canada, the country’s largest ever private investment, was announced to great fanfare. Fast forward to 2019 and protests against the Coastal Gas Link that will feed the project have caused some nervousness.
Export woes precipitated a price differential for Alberta crude of more than $40 barrel in 2018 and led the Alberta government to put in place production caps that, while seeming to have done the trick, have created a divide between integrated and pure producers. Bill C-69 is causing consternation in the oil patch. Provincially, Jason Kenney’s Conservative government is taking much more aggressive positions in support of Alberta’s oil and gas industry, including establishing a ‘war room’ to defend the province’s industry. These developments are featuring prominently in this year’s federal election.
While the lack of export capacity is dampening investment, it is pushing companies to innovate, to lower their costs, create cash flow and continue to grow into the 2020s. This is vital given that energy is abundant, inexpensive and competition from new sources is increasing. Shale oils and condensates prices are only modestly discounted and billions in spending is finding its way to these high value plays. The Alberta government has made nearly a half a billion in tax credits for two petrochemical projects, doubling down on its bet that value added projects are a viable future for the Provinces’ hydrocarbon industry.
At the sixteenth annual Calgary Energy Roundtable conference sector leaders gathered for discussions on: Opportunity through innovation. A high-powered line-up of speakers shared their insights on how to navigate today’s energy markets, including:
A networking reception took place on Wednesday, October 9th from 5:00-7:00 pm at Le Germain Hotel.
Wednesday, October 9th at The Twins, Le Germaine Hotel, 899 Centre Street SW
5:00 – 7:00 pm
Calgary Energy Roundtable Conference
Thursday, October 10th, Imperial Ballroom, Hyatt Regency, 700 Centre Street
|Conference chair||Tom Clark, veteran journalist and Chair, Global Public Affairs|
Registration. Light breakfast served.
|8:05 am||The energy outlook.Canada has the third largest oil reserves in the world, is the fourth largest producer of oil and natural gas and is a worldwide leader in responsible development. However, Canada’s oil and gas industry continues to face challenges, including market access delays, policy angst and top-line commodity prices. Final approval of the LNG Canada project provides optimism that Canada can get its product to international markets. And there is a new resiliency in the world of oil and gas where leading operators with high-quality assets can now be quite active at $US50/B. Given all the forces of change at play some in the industry will falter, while others are becoming leaner and stronger, ready to take on the 2020s as demand expands. The panel will provide perspectives on oil and gas development in Canada going forward.
Discussion led by: Ben Rogers, Managing Partner (Calgary), Blake, Cassels & Graydon LLP
|8:50 am||Fireside chat with Michael Crothers, Country Chair, Shell Canada and Vice President, Canada Integrated Gas|
|9:15 am||Investing trends in Canadian oil and gas.Significant divestitures of assets by foreign majors that has resulted in changing ownership structures for the Canadian energy sector. M&A activity has increased, with companies seeking to consolidate and focus their strategy. The negative investment climate and the discount on Alberta’s Western Canada Select have created buying opportunities for those in the energy sector who believe valuations no longer make sense. As investment in Canadian shale assets continues we may see further consolidation focused on shale and natural gas assets. Going forward, there may be a decrease in big energy deals in Canada, as most of the larger foreign players pulled out of the market. Energy infrastructure may be an exception, with major oil, gas and power infrastructure projects underway to produce, transport or add value to the industry. While capital markets have remained relatively constrained for many industry participants during the low commodity price cycle, private equity has found opportunities to deploy capital in Canada at an attractive part of the cycle from a valuations standpoint. The panel will examine investing trends in the Canadian energy sector.
Discussion led by: Dan McLeod, Partner, Blake, Cassels & Graydon LLP
|10:05 am||Networking break|
|10:35 am||Industry 4.0: Operational Excellence by Scaling Data & Advanced Analytics. Energy companies are facing an unprecedented convergence of technological, social, and regulatory forces. As artificial intelligence, automation, Internet of Things, blockchain, and 5G become pervasive, their combined impact will reshape standard business architectures. The “outside-in” digital transformation of the past decade is giving way to the “inside-out” potential of data exploited with these exponential technologies. They are altering energy companies’ operations, including exploration, transportation, refining and retail. These technologies are also creating unprecedented levels of industry dislocation, with new entrants fundamentally changing the economics of the business. The panel will examine how energy companies can thrive by conceiving and offering compelling new customer and end-consumer experiences, advance operational efficiencies, launch new digital offerings and build innovation ecosystems.
Discussion led by: Pavel Rahman, Head, AI & Advanced Analytics, IBM Canada
|11:20 am||Energy and cybersecurity: maintaining a defensible position. Cyber security risks are mounting and changing on a daily basis, forcing governments, organizations and corporations to increase vigilance and cooperation as they seek to best secure critical infrastructure from cyber intrusions. In 2017, the Canadian Cyber Incident Response Centre (CCIRC) handled 1,594 incidents with critical infrastructure organizations. A true number could be difficult to pinpoint as companies often don’t go public about cyber-attacks or breaches, while others might not have detected a cyber intrusion – yet. In light of sustained cyber security threats from a range of sources, energy companies must work to ensure their networks and critical control infrastructure are best positioned to deal with significant attack events, when they occur. The panel will examine key technology advances, regulatory requirements, and success strategies for effectively dealing with cyber security threats.
Discussion led by: Jeff Thomas, Partner, Advisory Services, KPMG
Fireside chat with Frank McKenna, Deputy Chair, TD Bank Group
|1:25pm||Fireside chat on First Nations ownership of export infrastructure and market access with Chief Tony Alexis, Alexis Nakota Sioux Nation; co-Chair of Iron Coalition|
|1:50 pm||Keynote address by Sonya Savage, Alberta Minister of Energy|
|2:15 pm||Electrification of the resource sector. The electrification of the resource sector, notably, upstream oil and natural gas, may help provinces meet their carbon reduction targets in the next decade and potentially allow for industry expansion. As BC, for example, develops a LNG export sector, the province, industry and possibly the federal government, are going to have to invest in electrification. But it’s not an easy path — the challenges to electrification include the need for costly transmission lines, where it may simply be too expensive to reach some regions; the cost of hooking up to those lines; and the higher price of electricity versus natural gas, used now to power compressors in natural gas processing plants and valves in producing wells. Environmentalists warn that electrification alone can’t help resource producing regions reach their carbon targets, as the reductions needed are too great. The panel will examine electrification in the resource sector going forward.
Discussion led by: Caroline Saunders, British Consul General, Calgary
|3:05 pm||Petrochemical: A sustainable solution for Alberta? There’s no shortage of opportunity in Alberta’s major new multibillion-dollar play in petrochemicals, but also some familiar-sounding risks. The Alberta government has granted a half billion of tax credits to two major projects to be built northeast of Edmonton. That will make some Albertans shudder, at least those who remember the “dirty dozen” of failed projects from the Lougheed-Getty era. But there have also been successes of government investment such as Syncrude, the Alberta Energy Company, and the ethane-based petrochemical industry. These wins all built on Alberta’s comparative advantages, such as ample reserves, skilled labour and the ability to integrate an operation with related businesses – advantages that hold true for the two new petrochemical projects. The rewards could be immense. The market for petrochemicals, such as the plastic pellets, is strong and growing. Challenges will include increased construction costs in a winter climate, possible issues in getting the product to the Asian market and green activists turning against a product. It has a familiar and unsettling ring, but there’s also no overlooking this opportunity.The panel will examine the petrochemical industry and if it is a sustainable solution for Alberta.
Discussion led by: Jennifer Winter, Assistant Professor and Scientific Director, Energy and Environmental Policy research division, The School of Public Policy, University of Calgary
|3:55 pm||Close by Jason Langrish, President, The Energy Roundtable|