Let’s call it like it is: Rachel Notley and Justin Trudeau have a huge role to play in the energy industry contraction in Alberta.
Poor policy decisions by the former NDP Alberta Government and the Federal Liberal Government have caused investment levels in Alberta to drop like a rock.
Not so, they say. Premier Notley was quick to suggest that the low world oil prices were the root cause of Alberta’s economic woes. If so, why has the US been an economic juggernaut with an energy revolution taking place? A revolution that has seen Canada’s largest and only energy customer no longer needing or wanting our products.
In 2011, US annual natural gas production was 24 TCF and in 2018 increased to a 33 TCF, a staggering 24 per cent increase in the short time of seven years. The US now produces more natural gas than it consumes, a feat it accomplished in 2017 and has increased a further 15 per cent since then.
The amount of natural gas production added by the US in seven years is two times the amount of natural gas production it took Canada 50 years to establish. The painful part of the story for Canadians, is that at one time 50 per cent of the natural gas produced in Canada was exported to the United States for upwards of $10 per mcf.
Not only does our largest and only customer not need our natural gas but they purchase it from Canada for less that $1.00 per mcf and in turn sell it to Mexico and export markets as LNG at prices in excess of $4.00 per mcf. Since 2016, the US has constructed four LNG export facilities and have approved the construction of new facilities that will double export capacity by 2021.
Over this time, it has been a challenge for Canadians to cooperate among its jurisdictions to see one LNG export facility constructed. Since 2010, there have been 18 proposals for the construction of LNG facilities on the BC Coast, all of which but one has been frustrated by regulatory morass and delays. LNG Canada is one project that received approval in 2018 and construction has since started, it is expected to begin operating in 2023, taking a mere 12 years from when it was first announced.
The key to its start-up will be the willingness and fortitude of the government to physically remove protestors that are likely to prevent the last mile construction of the Coastal Gas link Pipeline providing the gas supply from North East BC.
The story is even more profound on the crude oil front, where the US has added 6 mm bbl/d of production since 2012. Include the barrel equivalence of natural gas, and the US has added a staggering 10 mm bbls per day in a period of seven years, nothing short of an energy revolution. No other country in history has ever mobilized the resources and provided the favourable regulatory frame work to result of such an energy revolution. Since 2008, the US has added 58,225 km of new crude pipelines while Canada has added zero.
Not only did the US experienced an energy revolution but it did so at the same time reducing GHG emission. The lower global oil prices appear only to be a hiccup for the US energy revolution while Canada’s energy industry investment declined 62% from 2014 to 2019 totaling over $200 billion of lost investment.
This can only be attributed to poor government policies supressing infrastructure investment in Canada.