The world is scrambling for energy but can’t count on Canada

A decade of stalled pipelines and limited export capacity leaves Canada unable to respond

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The world is once again scrambling for reliable energy supplies. Canada should be one of the obvious answers but a decade of Liberal government policies that restricted pipelines and export infrastructure mean the country cannot respond quickly to the opportunity.

Canada’s inability to respond quickly matters now because escalating conflict in the Middle East has triggered another oil shock. Countries are now searching for new sources of supply from one of the world’s main energy-producing regions, and few can replace that output quickly.

Federal Energy Minister Tim Hodgson says countries are already contacting Canada to ask how Canadian producers could help fill the gap.

“The world right now is feeling incredibly insecure,” Hodgson said in an interview with CBC News. “So, we’ve already seen an uptick in inquiries about how quickly Canada can expand its clean and conventional energy exports.”

Renaud Brossard, vice-president at the Montreal Economic Institute, says that Poland, Germany, Japan, South Korea and India are among the countries looking to Canada’s energy sector.

But Hodgson concedes that it could take some time for Canadian producers to respond. “You don’t change the amount of production of LNG [liquefied natural gas] or oil in days,” he said. Developing Canada’s natural resources will take time, the energy minister says. But much of that time was already lost to years of Liberal government policies that slowed pipeline and export development.

For much of the past decade, major pipeline and export proposals stalled or were cancelled amid regulatory delays and political opposition. Projects such as Northern Gateway and Energy East were ultimately abandoned, limiting the country’s ability to build new export capacity.

As a result, Canada lacks the infrastructure needed to move its energy to global markets.

At 100 per cent capacity, the Trans Mountain Expansion pipeline, which carries crude oil from Alberta to the Pacific Coast, can send about 890,000 barrels a day from Edmonton to Burnaby for onward shipment to Pacific Rim countries. Last fall, it was operating at 80 to 85 per cent capacity.

More energy export projects are currently being planned. A newly operational LNG plant in Kitimat, B.C., Canada’s first large-scale liquefied natural gas export facility, has a capacity of 14 million tonnes a year and serves markets such as Japan, Korea and Malaysia.

Energy investment projects proposed in Quebec’s Baie-Comeau and approved in Newfoundland’s Bay du Nord could help Canada meet European needs. Alberta and Ottawa have also signed a memorandum of understanding for a new pipeline.

Canada’s energy sector can fill the gap to “a small degree,” said Tristan Goodman of the Explorers and Producers Association of Canada (EPAC) in comments to CBC News. “Can it in any way contribute in a large or significantly meaningful way to what is being lost? The answer is no—it cannot today,” he said.

But expanding capacity on Canada’s existing infrastructure will not be enough to meet the broader global supply gap estimated at up to 20 million barrels a day linked to the conflict involving Iran, and the proposed projects could take years to finish, Goodman told CBC.

“There are some minor things that could certainly be considered by individual companies and governments that can support a bit of increased production to fill that void. But over the long term, you need to build fairly major pieces of infrastructure,” he added.

For now, that means Canada remains largely a bystander in a global energy crisis even as the world searches for the reliable supply it could have provided.

Toronto-based Rashid Husain Syed is a highly regarded analyst specializing in energy and politics, particularly in the Middle East. In addition to his contributions to local and international newspapers, Rashid frequently lends his expertise as a speaker at global conferences. Organizations such as the Department of Energy in Washington and the International Energy Agency in Paris have sought his insights on global energy matters.