April 2 was ‘Liberation Day’ according to U.S. President Donald Trump. While the announcement of U.S. reciprocal tariffs was not good news for many countries, Trump’s announcement also had some good news for Canadian Energy companies – 0% tariffs. Some tariffs against Canada are still in place, but for now, no energy sector tariffs against Canada underscores the importance of Canadian energy to the Trump administration.
President Trump announced new tariffs on April 2nd, which he dubbed “Liberation Day” with a 10% baseline tariff for all U.S. trading partners, to go into effect on April 5th. He also announced more reciprocal tariffs against the “worst offenders,” which will go into effect on April 9th but no tariffs on Canadian energy were announced.
Trump’s Reciprocal Tariffs Announcement
Alberta Premier Danielle Smith celebrated the win which she says is precisely what she has been advocating for from the U.S. Administration for months.
“The United States has decided to uphold the majority of the free trade agreement (CUSMA) between our two nations. It also appears this will continue to be the case until after the Canadian Federal election has concluded and the newly elected Canadian government is able to renegotiate CUSMA with the U.S. Administration. It means that the majority of goods sold into the United States from Canada will have no tariffs applied to them, including 0% tariffs on energy, minerals, agricultural products, uranium, seafood, potash and a host of other Canadian goods.”
This is great news for Canadian energy producers, especially natural gas producers who are experiencing dramatic growth in the Montney.
At this year’s S&P Global CERAWeek, Mike Verney, Executive Vice-President of petroleum reserves with McDaniel & Associates Consultants Ltd. had great news for Canadian companies.
McDaniel’s study, commissioned by the Alberta Energy Regulator (AER), reported data indicating that Alberta has proven natural gas reserves of 130 trillion cubic feet (TCF), compared to previous provincial estimates of only 24 TCF. According to the study, if probable gas reserves are added in, the overall figure is 144 TCF.
As reported in the Financial Post, Verney said “We’re growing like mad in the Montney. The major natural gas plays in the U.S. are actually declining versus the Montney that is actually growing.”
This message was echoed by Michael Rose, the Chairman, President and Chief Executive Officer of Tourmaline Oil, Canada’s largest natural gas producer during his keynote address at the SPE Canadian Energy Technology Conference and Exhibition last month in Calgary.
Not a Sunset Industry
Michael Rose – Chairman, President and Chief Executive Officer of Tourmaline Oil
Rose opened his keynote speech with optimism saying: “This is not a sunset industry- it is closer to sunrise than sunset” and spoke about Canada’s compelling opportunity for natural gas production as well as Tourmaline’s successes.
Reuters reports that analysts are wondering about the U.S.’s ability to meet the demand growth of booming liquefied natural gas (LNG) projects and also to meet huge domestic demand for natural gas-fired electricity generation to supply new data centre growth. Canada’s resources in Alberta’s Deep Basin and the North East BC Montney will be a huge supply source.
Deep Basin and the Montney are where the most competitive gas plays are found, and where Tourmaline operates as well as producing oil in the Peace River Triassic Lake.
Rose credits technology development and the building and ownership of midstream infrastructures as keys to affordability and profitability for Canadian companies which can control costs by controlling more of the production cycle. In addition, AI optimization has helped the company increase production. He also pointed out the environmental advantage of natural gas production. Since society needs the energy density of hydrocarbons to power industries, natural gas is the best choice as it is “the cleanest member of the fossil fuel stack.” He quoted Arjun Murti– 30 year Wall Street research analyst, buy-side investor, and advisor covering the global energy sector now with Veriten.com who asserts that there is no real energy transition and the only thing humans have actually transitioned off in the energy world is whale oil.
Rose said that 2022 statistics indicated the world set a record for all sources of energy. He pointed out that coal was supposed to replace wood 200 years ago, and it still hasn’t while wood, which has been renamed as biomass is still 7% of the overall energy stack.
The Golden Age of Gas
Rose’s natural gas outlook to 2028 in Canada was rosy saying gas “never looked better.” Beyond 2028 also looks good with a proliferation of electricity generation planned to feed data centre growth. In Alberta alone, 15 projects are in queue which will create a material increase in demand. In the U.S. however, some large U.S. natural gas supply basins have reached a tipping point with only 50% estimated ultimate recovery (EUR) left. Rose reported that drilling inventory is an issue in the U.S. but not in Canada. For example, Tourmaline has over 20 years of Tier 1 drilling inventory left while its U.S. peers don’t have the same luxury. He noted that U.S. M&A is currently driven by a quest for inventory. He noted that U.S. companies will chase profitable acquisitions in a quest for inventory to lower future costs saying “Things are still cheap in Canada.”
Canadian Resources – Will we ever be an energy superpower?
With global exploration down sharply, focus has turned to the WCSB where in the case of the Montney, only 5% has been produced so far.
“All you hear about is the western Canadian sedimentary basin and it is a monster, and it is the gift that keeps on giving, but we’re actually blessed with multiple other opportunities. Like the U.S., a number of them are off limits for government policy reasons, but certainly changes are in order.”
Some of the undeveloped basins in Canada which Rose referred to as “forbidden basins” are located on the West Coast and in the lowlands in Quebec. The tariff issue may be changing attitudes towards oil and gas development in those areas. Dealing with an unsupportive Federal Government for the last decade has made capital attraction difficult. Routine talk about phasing out Oil and Gas and the series of regulations, bills and initiatives that have stalled basin development and new pipelines have taken its toll. It has discouraged capital from flowing into the sector – a period that Rose said “ felt like an endless hurricane.”
So what is the right path forward?
The challenge for industry and policymakers is finding the right balance between energy and the environment according to Rose. He advises that setting unrealistic goals and timelines that are not based in science/technology or economics won’t work, and notes a shift away from the time frame set by net zero.
“We look at the whole environment, air, land and water, and we develop plans to improve performance in all three. We have a group of young engineers working on what amounts to an embedded clean tech business within our company, and I think they’re having a lot of fun doing it.”
One of Tourmaline’s longest initiatives, is the conversion of drilling rigs from diesel to natural gas, using field gas for fuel. The result is that projects have an improved economic return as well as reduced emissions. Rose says this year, Tourmaline will cross a “200 million barrier” and will have displaced 200 million litres of diesel and save $200 million including the makeup gas used. He says they like to think of it as a drill bit to burn initiative.
Mike Rose still had an optimistic view of the path forward for energy companies that is certainly more relevant after yesterday’s “Liberation Day” announcement from Trump.
“We’ve missed 10 years of opportunities,” Rose said. “It would have made us so much stronger than we are today as an industry and a country. Still, late is better than never. The only thing I’ll say about tariffs is that they are just another curve ball. We’ve had nothing but curve balls for 10 years, and we’ll figure out how to hit this one too. Given how integrated both countries’ energy systems are and will continue to be, I think a great narrative that just might appeal is: ‘Let’s make North America the world’s preeminent energy and oil and gas superpower’.”
Maureen McCall is an energy professional who writes on issues affecting the energy industry.
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Chief David Jimmie is president of Stonlasec8 and Chief of Squiala First Nation in B.C. He also chairs the Western Indigenous Pipeline Group. Photo courtesy Western Indigenous Pipeline Group
Stonlasec8 agreement is Canada’s first federal Indigenous loan guarantee
The first federally backed Indigenous loan guarantee paves the way for increased prosperity for 36 First Nations communities in British Columbia.
In May, Canada Development Investment Corporation (CDEV) announced a $400 million backstop for the consortium to jointly purchase 12.5 per cent ownership of Enbridge’s Westcoast natural gas pipeline system for $712 million.
In the works for two years, the deal redefines long-standing relationships around a pipeline that has been in operation for generations.
“For 65 years, there’s never been an opportunity or a conversation about participating in an asset that’s come through the territory,” said Chief David Jimmie of the Squiala First Nation near Vancouver, B.C.
“We now have an opportunity to have our Nation’s voices heard directly when we have concerns and our partners are willing to listen.”
Jimmie chairs the Stonlasec8 Indigenous Alliance, which represents the communities buying into the Enbridge system.
The name Stonlasec8 reflects the different regions represented in the agreement, he said.
The Westcoast pipeline stretches more than 2,900 kilometres from northeast B.C. near the Alberta border to the Canada-U.S. border near Bellingham, Wash., running through the middle of the province.
Map courtesy Enbridge
It delivers up to 3.6 billion cubic feet per day of natural gas throughout B.C. and the Lower Mainland, Alberta and the U.S. Pacific Northwest.
“While we see the benefits back to communities, we are still reminded of our responsibility to the land, air and water so it is important to think of reinvestment opportunities in alternative energy sources and how we can offset the carbon footprint,” Jimmie said.
He also chairs the Western Indigenous Pipeline Group (WIPG), a coalition of First Nations communities working in partnership with Pembina Pipeline to secure an ownership stake in the newly expanded Trans Mountain pipeline system.
There is overlap between the communities in the two groups, he said.
“It’s not a new idea. Alberta started it before us, and Ontario,” Labelle said.
“We hired some of the same advisors AIOC hired because we want to make sure we are aligned with the market. We didn’t want to start something completely new.”
Broadly, Jimmie said the Stonlasec8 agreement will provide sustained funding for investments like housing, infrastructure, environmental stewardship and cultural preservation. But it’s up to the individual communities how to spend the ongoing proceeds.
The long-term cash injections from owning equity stakes of major projects can provide benefits that traditional funding agreements with the federal government do not, he said.
Labelle said the goal is to ensure Indigenous communities benefit from projects on their traditional territories.
“There’s a lot of intangible, indirect things that I think are hugely important from an economic perspective,” he said.
“You are improving the relationship with pipeline companies, you are improving social license to do projects like this.”
Jimmie stressed the impact the collaborative atmosphere of the negotiations had on the success of the Stonlasec8 agreement.
“It takes true collaboration to reach a successful partnership, which doesn’t always happen. And from the Nation representation, the sophistication of the group was one of the best I’ve ever worked with.”
“So we’re going to have an order on that pretty soon – we can’t do that to our farmers and leisure too, hotels, we’re going to have to use a lot of common sense on that.”
President Donald Trump said Thursday that changes are coming to his aggressive immigration policies after complaints from farmers and business owners.
“Our great Farmers and people in the Hotel and Leisure business have been stating that our very aggressive policy on immigration is taking very good, long time workers away from them, with those jobs being almost impossible to replace,” Trump wrote in a social media post Thursday morning. “In many cases the Criminals allowed into our Country by the VERY Stupid Biden Open Borders Policy are applying for those jobs. This is not good. We must protect our Farmers, but get the CRIMINALS OUT OF THE USA. Changes are coming!”
Later Thursday, Trump made it clear that businesses need workers.
“Our farmers are being hurt badly. They have very good workers – they’re not citizens, but they’ve turned out to be great. And we’re going to have to do something about that,” the president said.
He added: “We can’t take farmers and take all their people and send them back because they don’t have, maybe, what they’re supposed to have.”
Just how Trump may change his approach to immigration enforcement remains unclear, but he said he wants to help farmers and business owners.
“You go into a farm and you look and people, they’ve been there for 20 or 25 years and they work great and the owner of the farm loves them and you’re supposed to throw them out. You know what happens? They end up hiring the criminals that have come in, the murderers from prisons and everything else,” Trump said.
Trump said changes would be coming soon, but gave little detail on how policies could change.
“So we’re going to have an order on that pretty soon – we can’t do that to our farmers and leisure too, hotels, we’re going to have to use a lot of common sense on that.”
In a later post on Truth Social, Trump said illegal immigration had destroyed American institutions.
“Biden let 21 Million Unvetted, Illegal Aliens flood into the Country from some of the most dangerous and dysfunctional Nations on Earth — Many of them Rapists, Murderers, and Terrorists. This tsunami of Illegals has destroyed Americans’ Public Schools, Hospitals, Parks, Community Resources, and Living Conditions,” the president wrote. “They have stolen American Jobs, consumed BILLIONS OF DOLLARS in Free Welfare, and turned once idyllic Communities, like Springfield, Ohio, into Third World Nightmares.”
He added that deportations would continue: “I campaigned on, and received a Historic Mandate for, the largest Mass Deportation Program in American History. Polling shows overwhelming Public Support for getting the Illegals out, and that is exactly what we will do. As Commander-in-Chief, I will always protect and defend the Heroes of ICE and Border Patrol, whose work has already resulted in the Most Secure Border in American History. Anyone who assaults or attacks an ICE or Border Agent will do hard time in jail. Those who are here illegally should either self deport using the CBP Home App or, ICE will find you and remove you. Saving America is not negotiable!”
