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Reports of the Impending Death of Petroleum Have Been Greatly Exaggerated

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18 minute read

From EnergyNow.ca

By Jim Warren

There is a good chance climate activists smugly celebrating the collapse of conventional energy production within a generation are wildly mistaken. It is just as plausible that the time between today and ‘sunset’ for petroleum will run several decades beyond ‘net zero day’ in 2050. Actually, both predictions are suspect. History has shown people are rarely able to foresee conditions three or more decades into the future with any great precision.

Yet it seems sections of the investment community and the legacy news media assume our geopolitical future will be governed by the race to achieve net zero. They see the green transition as inevitable as death and taxes and presume oil will be sidelined accordingly.

A CBC news item that aired on March 16 boldly led with the prediction that the recently completed Trans Mountain pipeline is “likely the last new oil export pipeline the country will ever need.” The reporter was clearly caught up in a chicken and egg conundrum. He mused that due to declining production over the next decade we wouldn’t need any new pipelines. Here’s a thought, if increases in production do indeed taper off it will likely be because we can’t get enough pipelines built. Of course some CBC reporters and their fellow travellers in the climate alarmist camp never let logic get in the way of writing jubilant obituaries for the fossil fuel industries. One of the problems for conventional energy producers is that lots of people, including potential investors, have been drinking the same Kool-Aid as the media.

If the climate alarmists really have won the day, the window of opportunity is closing or has already closed on significant oil sands plant expansions, new pipelines to tidewater and any future boom in conventional oil production. After all, who wants to invest in infrastructure projects that will take a decade or more to be approved, could later be cancelled, or taxed into insolvency well before the end of their productive life spans?

No matter how long the window for viable investments remains open, one thing is clear—the Justin Trudeau government has already shortened it by a decade or more. During the eight year oil price depression that began in late 2014, new pipelines to tidewater were the one glimmer of hope for an improvement in the prices received by Canadian exporters. With more than 90,000 jobs lost in oil and gas production, manufacturing and construction by 2017, there were a lot of unemployed people in the producing provinces looking for a break. Northern Gateway, Energy East and Trans Mountain would of course allow Canadian producers to avoid the steep discounts they were subject to in the US for a significant proportion of their exports. The Trudeau Liberals cancelled any hope for that modestly brighter future.

Trans Mountain was the exception. It was the consolation prize to make up for the cancellations of Northern Gateway, Energy East and the Keystone XL. And yes, amazingly, the federal government finally got it built. It was touch and go. We were always just one bird nest away from another lengthy delay.

But wait, take heart. There is mounting evidence to suggest the hand wringing climate activists and cautious investors could have it all wrong. The goals of the green transition will probably take many more decades to achieve than they imagine.

In fact, recent events suggest the whole green transition project could actually be coming off the rails. Europe’s Green politicians are being clobbered at the polls while climate change skeptics from populist and conservative parties continue to attract voters and win elections. Green transition initiatives have been postponed and cancelled in several EU countries and the UK. The principal cause of the retreat is popular resistance to green transition initiatives that contribute to what is already an unacceptably high cost of living.

For instance, the Yellow Vests protests in France forced President Emmanuel Macron to forego a number of unpopular fuel tax measures including a carbon tax. But that wasn’t until after 11 people died and over 4,000 were injured as a result of the protests. The protests began in November 2018 and have continued sporadically to the present.

Protests by farmers in the Netherlands in 2019 beat back GHG reduction measures which would have restricted nitrogen fertilizer use and cut the national cow herd by one-half. Farmers refused to accept the assault on their incomes and plugged the country’s highways with their tractors. One of their demonstrations was reported to have caused 1000 km of traffic jams. In another protest they shut down Eindhoven airport for a day. Members of one of the more militant groups participating in the protests, the Farmers Defense Force, threatened civil war.

A new political party, the Farmer-Citizen Movement (Dutch: BBB), arose out of the Dutch farm protests. In March of 2023, the BBB won the popular vote in Netherlands’ provincial elections (they are all held on the same day) and the majority of seats in each of the country’s 12 provinces. The victory is all the more significant because the provincial governments choose who sits in the national Senate which has the power to block legislation. Protests by farmers over similar green transition projects have been occurring in France, Belgium and Germany.

The German government’s ambitious heat pump mandate had to be postponed and rethought. The ineptitude of environmentally-friendly bureaucrats who came up with the scheme was evident in the fact they still hadn’t figured out which type of heat pumps would work best under different conditions. For example, the heat pumps’ inability to operate effectively in cold weather was one of the details planners had overlooked. Additionally, they neglected to train enough technicians in heat pump installation to actually put them in people’s homes. Green politicians and their allies in government were blamed for the technical debacle and high costs for consumers. As a result, populists and likeminded conservative candidates have been defeating the Greens and Social Democrats in regional elections.

The October 2023 state elections in economically and politically powerful Hesse and Bavaria provided two of the more significant (and startling) losses in support of Germany’s three party governing coalition that includes the social democrats and the Greens. What the coalition parties lost, the right-wing populist Alternative for Germany (AfD) and conservatives won. (The Greens claim the AfD are “climate change denialists.”)  The AfD is now the second largest party in terms of voter support in Hesse and the third largest in Bavaria. The online publication Energy Wire observed that the AfD platform featured concern for the flagging German economy, high energy prices, climate policy, the energy transition and immigration (in that order). More recently the Greens were the biggest losers in this May’s vote in the city state of Bremen. The Green’s 11.7% share of the vote was their poorest showing in 25 years.

Last year’s auction of UK government contracts for new offshore wind farms failed to receive a single bid. Under the auction scheme companies who purchased permits to build wind farms would receive a guaranteed premium price for the electricity they produced. The premium offered was too low to attract any interest. The Sunak government was simply not prepared to weather the consumer backlash that would accompany raising the guaranteed premium price high enough to attract bidders. Increasing the premium would require increasing electrical bills and/or taxes paid by British voters.

Melting glaciers are apparently not enough to convince some Europeans to open their wallets in support of achieving net zero. This applies even in the heart of the Alps in Switzerland. The 2020 Swiss referendum on a plan for achieving net zero GHG emissions by 2050 was soundly defeated. A significantly revised plan was later approved, but only after carbon taxes had been removed in favour of a carbon offset system and a number of other tax measures had been withdrawn. The Economist reported that one of the loudest lobby groups opposing the first referendum was the organization for Swiss resort and hotel owners. The carbon tax threatened to raise the cost of making artificial snow.

Europe’s Greens hoped to take a victory lap after recent increases in the number of solar power farms being built across Europe; especially in Germany. They have been woefully disappointed. Their promises about the thousands of new jobs that would be created by the transition to renewables proved empty and voters are not impressed. It turns out 95% of the solar systems installed in Europe are imported from Asia, mostly from China. With the exception of some local installation work, the lion’s share of the economic benefits and jobs go to Chinese firms.

No less embarrassing is the fact that one third of the essential components for Chinese solar systems are sourced from Xinjiang Province where manufacturers are known to be using forced labour. Members of the region’s Uyghur minority, who are being held prisoner in “reeducation camps,” provide the captive labour. Europe’s own solar panel producers are lobbying for relief in the form of trade restrictions on Chinese imports and/or EU subsidies. Solar system advocates in the west are between the proverbial rock and a hard place. To create the promised jobs will likely require stiff tariffs that will in turn increase the cost of solar energy and contribute to the public backlash over the already high cost of living.

Europe’s solar power dilemma echoes the French populist, Marine Le Pen’s, critique of global free trade: “Globalization is when slaves in China make things to sell to the unemployed in the west.” Le Pen came second in the last French presidential election. She has a shot at winning the next one which will be held three years from now. Le Pen is an EU skeptic who is unlikely to readily buy into its suite of exceedingly zealous GHG reduction targets and green transition policies; especially those relying heavily on foreign imports.

European auto makers have geared up their electric car production capabilities in anticipation of the EU ban on the manufacturing of new internal combustion passenger vehicles set for 2035. They are currently worried Chinese electric vehicle makers (EVs) are going to eat their lunch. The zippy little EVs made in China are far less expensive than European models. Chinese EV exports grew by 70% last year to just over $34 billion. As is the case with solar systems, the employment benefits associated with the transition to electric vehicles will be enjoyed in China not Europe. Apparently, European auto makers are frantically lobbying their governments to follow Joe Biden’s example and impose hefty tariffs on Chinese made EVs. If the car makers get their wish, jobs will be saved in Europe but the costs to European car buyers will be higher than they would be if they could buy Chinese autos. Europe’s EV problems involve the same sort of high costs versus jobs Catch 22 plaguing the EU’s solar system manufacturers. Whichever way things go, a lot of voters will be unhappy.

The growing list of failed and failing green transition initiatives is in part responsible for the surge in support for populist and conservative parties in Europe (Poland’s general election being a recent exception). And, most of Europe’s populist politicians are openly opposed to measures that increase taxes and the cost of living on behalf of combating climate change. The electoral success of the right-wing populist party, the Party for Freedom (Dutch: PVV) in the Netherlands’ November 2023 federal election is a case in point. The PVV is led by the infamous anti-immigration populist, Geert Wilders.

Wilders is not a climate change denier. He just doesn’t want to ruin the Dutch economy to combat it. Dutch environmentalists warn sea level rise caused by climate change warrants a significant reductions in GHG emissions; particularly in a country where 26% of the land is below sea level. Wilders’ solution is to just build the dikes higher.

The PVV won more seats than any other party in 2023 giving it the plurality but not a majority in the Dutch parliament. On May 16, four parties including the PVV and the Farmer-Citizen Movement (BBB) finally cobbled together a coalition government. Geert Wilders will become prime minister sometime this June. Obviously, neither the PVV or the BBB are fans of the EU’s climate change mitigation policies.

Closer to home, should Donald Trump win this November’s U.S. presidential election, progress toward net zero will virtually cease in the US for at least the next four years. And, in Canada, if current federal polling numbers hold up until Trudeau finally calls an election, we can expect the cancellation of a number of Liberal environmental initiatives; presumably, the No More Pipelines Bill and the carbon tax in particular.

The foregoing examples of recent setbacks, along with stories told by the tea leaves, indicate the road toward a green transition will be pitted with potholes and subject to roadblocks. Achieving net zero by 2050 is far from a slam dunk. Oil production is just as likely to prove far more robust than the environmental movement imagines.

Then again, if science figures out how to contain fusion reactions for extended periods of time in the next decade or so, all bets are off. Nobody knows for certain what the future holds when it comes to geopolitical conditions and energy production thirty to fifty years from today. The economist, John Maynard Keynes, claimed the only consolation for those foolishly trying accurately to predict events over the long run, was that “In the long run we are all dead.”

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Alberta

The permanent CO2 storage site at the end of the Alberta Carbon Trunk Line is just getting started

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Wells at the Clive carbon capture, utilization and storage project near Red Deer, Alta. Photo courtesy Enhance Energy

From the Canadian Energy Centre

By Deborah Jaremko

Inside Clive, a model for reducing emissions while adding value in Alberta

It’s a bright spring day on a stretch of rolling farmland just northeast of Red Deer. It’s quiet, but for the wind rushing through the grass and the soft crunch of gravel underfoot.

The unassuming wellheads spaced widely across the landscape give little hint of the significance of what is happening underground.

In just five years, this site has locked away more than 6.5 million tonnes of CO₂ — equivalent to the annual emissions of about 1.5 million cars — stored nearly four CN Towers deep beneath the surface.

The CO₂ injection has not only reduced emissions but also breathed life into an oilfield that was heading for abandonment, generating jobs, economic activity and government revenue that would have otherwise been lost.

This is Clive, the endpoint of one of Canada’s largest carbon capture, utilization and storage (CCUS) projects. And it’s just getting started.

 

Rooted in Alberta’s first oil boom

Clive’s history ties to Alberta’s first oil boom, with the field discovered in 1952 along the same geological trend as the legendary 1947 Leduc No. 1 gusher near Edmonton.

“The Clive field was discovered in the 1950s as really a follow-up to Leduc No. 1. This is, call it, Leduc No. 4,” said Chris Kupchenko, president of Enhance Energy, which now operates the Clive field.

Over the last 70 years Clive has produced about 70 million barrels of the site’s 130 million barrels of original oil in place, leaving enough energy behind to fuel six million gasoline-powered vehicles for one year.

“By the late 1990s and early 2000s, production had gone almost to zero,” said Candice Paton, Enhance’s vice-president of corporate affairs.

“There was resource left in the reservoir, but it would have been uneconomic to recover it.”

Facilities at the Clive project. Photo courtesy Enhance Energy

Gearing up for CO2

Calgary-based Enhance bought Clive in 2013 and kept it running despite high operating costs because of a major CO2 opportunity the company was developing on the horizon.

In 2008, Enhance and North West Redwater Partnership had launched development of the Alberta Carbon Trunk Line (ACTL), one of the world’s largest CO2 transportation systems.

Wolf Midstream joined the project in 2018 as the pipeline’s owner and operator.

Completed in 2020, the groundbreaking $1.2 billion project — supported by the governments of Canada and Alberta — connects carbon captured at industrial sites near Edmonton to the Clive facility.

“With CO2 we’re able to revitalize some of these fields, continue to produce some of the resource that was left behind and permanently store CO2 emissions,” Paton said.

Map of the Alberta Carbon Trunk Line courtesy of Wolf Midstream

An oversized pipeline on purpose

Each year, about 1.6 million tonnes of CO2 captured at the NWR Sturgeon Refinery and Nutrien Redwater fertilizer facility near Fort Saskatchewan travels down the trunk line to Clive.

In a unique twist, that is only about 10 per cent of the pipeline’s available space. The project partners intentionally built it with room to grow.

“We have a lot of excess capacity. The vision behind the pipe was, let’s remove barriers for the future,” Kupchenko said.

The Alberta government-supported goal was to expand CCS in the province, said James Fann, CEO of the Regina-based International CCS Knowledge Centre.

“They did it on purpose. The size of the infrastructure project creates the opportunity for other emitters to build capture projects along the way,” he said.

CO2 captured at the Sturgeon Refinery near Edmonton is transported by the Alberta Carbon Trunk Line to the Clive project. Photo courtesy North West Redwater Partnership

Extending the value of aging assets

Building more CCUS projects like Clive that incorporate enhanced oil recovery (EOR) is a model for extending the economic value of aging oil and gas fields in Alberta, Kupchenko said.

“EOR can be thought of as redeveloping real estate,” he said.

“Take an inner-city lot with a 700-square-foot house on it. The bad thing is there’s a 100-year-old house that has to be torn down. But the great thing is there’s a road to it. There’s power to it, there’s a sewer connection, there’s water, there’s all the things.

“That’s what this is. We’re redeveloping a field that was discovered 70 years ago and has at least 30 more years of life.”

The 180 existing wellbores are also all assets, Kupchenko said.

“They may not all be producing oil or injecting CO2, but every one of them is used. They are our eyes into the reservoir.”

CO2 injection well at the Clive carbon capture, utilization and storage project. Photo for the Canadian Energy Centre

Alberta’s ‘beautiful’ CCUS geology

The existing wells are an important part of measurement, monitoring and verification (MMV) at Clive.

The Alberta Energy Regulator requires CCUS projects to implement a comprehensive MMV program to assess storage performance and demonstrate the long-term safety and security of CO₂.

Katherine Romanak, a subsurface CCUS specialist at the University of Texas at Austin, said that her nearly 20 years of global research indicate the process is safe.

“There’s never been a leak of CO2 from a storage site,” she said.

Alberta’s geology is particularly suitable for CCUS, with permanent storage potential estimated at more than 100 billion tonnes.

“The geology is beautiful,” Romanak said.

“It’s the thickest reservoir rocks you’ve ever seen. It’s really good injectivity, porosity and permeability, and the confining layers are crazy thick.”

Suitability of global regions for CO2 storage. Courtesy Global CCS Institute

CO2-EOR gaining prominence 

The extra capacity on the ACTL pipeline offers a key opportunity to capitalize on storage potential while addressing aging oil and gas fields, according to the Alberta government’s Mature Asset Strategy, released earlier this year.

The report says expanding CCUS to EOR could attract investment, cut emissions and encourage producers to reinvest in existing properties — instead of abandoning them.

However, this opportunity is limited by federal policy.

Ottawa’s CCUS Investment Tax Credit, which became available in June 2024, does not apply to EOR projects.

“Often people will equate EOR with a project that doesn’t store CO2 permanently,” Kupchenko said.

“We like to always make sure that people understand that every ton of CO2 that enters this project is permanently sequestered. And we take great effort into storing that CO2.”

The International Energy Forum — representing energy ministers from nearly 70 countries including Canada, the U.S., China, India, Norway, and Saudi Arabia — says CO₂-based EOR is gaining prominence as a carbon sequestration tool.

The technology can “transform a traditional oil recovery method into a key pillar of energy security and climate strategy,” according to a June 2025 IEF report.

Drone view of the Clive project. Photo courtesy Enhance Energy

Tapping into more opportunity

In Central Alberta, Enhance Energy is advancing a new permanent CO2 storage project called Origins that is designed to revitalize additional aging oil and gas fields while reducing emissions, using the ACTL pipeline.

“Origins is a hub that’s going to enable larger scale EOR development,” Kupchenko said.

“There’s at least 10 times more oil in place in this area.”

Meanwhile, Wolf Midstream is extending the pipeline further into the Edmonton region to transport more CO2 captured from additional industrial facilities.

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Alberta

Canadian Oil Sands Production Expected to Reach All-time Highs this Year Despite Lower Oil Prices

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From Energy Now

S&P Global Commodity Insights has raised its 10-year production outlook for the Canadian oil sands. The latest forecast expects oil sands production to reach a record annual average production of 3.5 million b/d in 2025 (5% higher than 2024) and exceed 3.9 million b/d by 2030—half a million barrels per day higher than 2024. The 2030 projection is 100,000 barrels per day (or nearly 3%) higher than the previous outlook.

The new forecast, produced by the S&P Global Commodity Insights Oil Sands Dialogue, is the fourth consecutive upward revision to the annual outlook. Despite a lower oil price environment, the analysis attributes the increased projection to favorable economics, as producers continue to focus on maximizing existing assets through investments in optimization and efficiency.


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While large up-front, out-of-pocket expenditures over multiple years are required to bring online new oil sands projects, once completed, projects enjoy relatively low breakeven prices.

S&P Global Commodity Insights estimates that the 2025 half-cycle break-even for oil sands production ranged from US$18/b to US$45/b, on a WTI basis, with the overall average break-even being approximately US$27/b.*

“The increased trajectory for Canadian oil sands production growth amidst a period of oil price volatility reflects producers’ continued emphasis on optimization—and the favorable economics that underpin such operations,” said Kevin Birn, Chief Canadian Oil Analyst, S&P Global Commodity Insights. “More than 3.8 million barrels per day of existing installed capacity was brought online from 2001 and 2017. This large resource base provides ample room for producers to find debottlenecking opportunities, decrease downtime and increase throughput.”

The potential for additional upside exists given the nature of optimization projects, which often result from learning by doing or emerge organically, the analysis says.

“Many companies are likely to proceed with optimizations even in more challenging price environments because they often contribute to efficiency gains,” said Celina Hwang, Director, Crude Oil Markets, S&P Global Commodity Insights. “This dynamic adds to the resiliency of oil sands production and its ability to grow through periods of price volatility.”

The outlook continues to expect oil sands production to enter a plateau later this decade. However, this is also expected to occur at a higher level of production than previously estimated. The new forecast expects oil sands production to be 3.7 million b/d in 2035—100,000 b/d higher than the previous outlook.

Export capacity—already a concern in recent years—is a source of downside risk now that even more production growth is expected. Without further incremental pipeline capacity, export constraints have the potential to re-emerge as early as next year, the analysis says.

“While a lower price path in 2025 and the potential for pipeline export constraints are downside risks to this outlook, the oil sands have proven able to withstand extreme price volatility in the past,” said Hwang. “The low break-even costs for existing projects and producers’ ability to manage challenging situations in the past support the resilience of this outlook.”

* Half-cycle breakeven cost includes operating cost, the cost to purchase diluent (if needed), as well as an adjustment to enable a comparison to WTI—specifically, the cost of transport to Cushing, OK and quality differential between heavy and light oil.

About S&P Global Commodity Insights

At S&P Global Commodity Insights, our complete view of global energy and commodity markets enables our customers to make decisions with conviction and create long-term, sustainable value.

We’re a trusted connector that brings together thought leaders, market participants, governments, and regulators and we create solutions that lead to progress. Vital to navigating commodity markets, our coverage includes oil and gas, power, chemicals, metals, agriculture, shipping and energy transition. Platts® products and services, including leading benchmark price assessments in the physical commodity markets, are offered through S&P Global Commodity Insights. S&P Global Commodity Insights maintains clear structural and operational separation between its price assessment activities and the other activities carried out by S&P Global Commodity Insights and the other business divisions of S&P Global.

S&P Global Commodity Insights is a division of S&P Global (NYSE: SPGI). S&P Global is the world’s foremost provider of credit ratings, benchmarks, analytics and workflow solutions in the global capital, commodity and automotive markets. With every one of our offerings, we help many of the world’s leading organizations navigate the economic landscape so they can plan for tomorrow, today. For more information visit https://www.spglobal.com/commodity-insights/en.

SOURCE S&P Global Commodity Insights

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