The problem with Postmedia
The news side of the Canadian media giant may have seen the light on the energy transition, but the opinion side is still very much stuck in the dark
With oil prices on a remarkable roll, you’d think that the Financial Post would be telling readers that we’re on the verge of another great boom. Instead, it ran a piece recently that suggested the opposite — that while commodities may be in for a bullish “supercycle”, oil is going to get left behind. According to a note from Capital Economics, the ever-accelerating energy transition is going to leave oil investors in the dust of metals like copper and aluminum.
“Oil consumption in the emerging world is also likely to peak in the next decade as their economies, including India, suffer long-term damage from the pandemic, argues Capital. Many of these countries as well are offering incentives for electric vehicles, particularly China and India.”
Worst of all, from the perspective of the oil and gas truthers who have come to rely on Postmedia for all of their bias confirmation needs, the piece even acknowledges that demand is going to peak — and soon. “Capital, like many other forecasters, see global oil demand peaking in 2030 and falling ‘continuously thereafter.’”
🎶One of these things is not like the other🎶
I’ve been thinking about what I can do with this newsletter to create value for the people who read it. One of them, I’ve decided, is wading through the worst columns at Postmedia so you don’t have to. With that in mind, let me spare you the agony of reading Lorne Gunter’s latest piece, in which he rages against the federal government for…fighting for a pipeline?
The reason he’s mad about the Liberal government’s decision to draw a hard line on Line 5, of course, is because they didn’t draw a similarly bold line on Keystone XL.
However, O’Regan added, the Trudeau Libs are going all out because Line 5 is “very different” from the Keystone XL pipeline.
Huh!? What!? How is it different?”
Gunter goes on to suggest that it’s because there are no votes in Alberta for the federal Liberals, which deserves at least partial credit. As I’ve argued in the past, Albertans need to stop voting Conservative so reflexively and reliably if they want any of the federal parties to take them seriously.
But there’s the more obvious fact that Line 5, which runs through the Straits of Mackinac in Michigan and has operated safely for decades, is different from Keystone XL, which has yet to be built. And while Gunter insists that “Keystone is vital to Alberta and Saskatchewan”, the truth is that with the ongoing construction of Line 3 and the Trans Mountain Expansion, it’s not needed to accommodate Alberta’s future production growth. That growth, of course, is substantially lower than it might have been a few years ago, when the widespread adoption of electric vehicles still looked like it was decades in the future. Whether Gunter likes it or not, we may never need another new export-oriented pipeline in our lifetime.
That’s especially true given that there are emerging technologies that make pipelines look like an expensive and cumbersome way to get oil to markets. Gibson Energy, for example, has a so-called “diluent recovery project” that can remove the diluent that helps sticky bitumen flow through pipelines, and which accounts for approximately one-third of the volume of so-called “dilbit”. And BHP Corp’s “Bitcrude”, which I wrote about back in 2015, could be on the verge of being commercialized in ways that both reduce the cost transporting Canadian bitumen and increase its safety.
So yes, Postmedia columnists will continue writing about pipeline projects and pretending that they’re central to Alberta’s economic future. But while that might have been true a decade ago, the reality on the ground has changed radically. The sooner they and the politicians they enable get with the program, the better off we’ll all be.
Don’t bet on that happening any time soon in Alberta, though. In a recent op-ed for the Edmonton Journal, Finance Minister Travis Toews laid out his vision for a robust economic recovery — and it feels like it could have been written in 2013. Calling it a vision is actually pretty generous, since it’s more like a false memory. In addition to criticizing the federal support programs that helped Canadians get through the pandemic and arguing, apparently without irony, that governments “shouldn’t pick winners”, Toews played his government’s favourite hit about Ottawa being the energy sector’s biggest problem. “Federal legislation such as Bill C-69, the “no more pipelines” law, and Bill C-48, the “West Coast tanker ban” law, have blunted economic growth in the energy industry, Canada’s largest goods-producing sector,” he wrote. “A recovery will not take place if we seek to destroy our national source of income via regulatory obstruction.”
Of course, the energy sector isn’t anything close to “our national source of income”, especially these days. And the notion that it’s the federal tanker ban or the changes made to the regulatory process (ones that clean up the mess left by the Harper government) that is impairing the energy sector is either willful blindness or economic illiteracy. And the notion that a federal government that bought and is building a crucial pipeline, gave inducements that helped get the biggest energy project in Canadian history (LNG Canada) across the starting line, and sent $1.7 billion to the Prairies to help industry clean up its old wells is somehow “seeking to destroy” said industry is obvious nonsense. But when your leader is trailing a Prime Minister named Trudeau in Alberta, as Jason Kenney is, maybe obvious nonsense is all you have to work with.
Is it time for “Ethical Hydrogen”?
Alberta’s government may not be moving at the “speed of business” when it comes to the energy transition, but Saudi Arabia certainly seems to have gotten the memo. After all, while Alberta has yet to really push its chips in on the growing global hydrogen market, the Saudis are all-in.
“As governments and industries seek less-polluting alternatives to hydrocarbons, the world’s biggest crude exporter doesn’t want to cede the burgeoning hydrogen business to China, Europe or Australia and lose a potentially massive source of income,” Bloomberg’s Verity Ratcliffe writes. “So it’s building a $5 billion plant powered entirely by sun and wind that will be among the world’s biggest green hydrogen makers when it opens in the planned megacity of Neom in 2025.”
That facility will give the Saudis an early piece of the growing global hydrogen market, one that BloombergNEF thinks could be worth $700 billion by 2050. By then, in fact, it wants to be the biggest supplier — the same as it has traditionally been with oil and gas. “You’re seeing a more diversified portfolio of energy exports that is more resilient,” said Shihab Elborai, a Dubai-based partner at consultant Strategy&. “It’s diversified against any uncertainties in the rate and timing of the energy transition.”
One cool thing: Tesla’s battery storage play
Tesla has already transformed the global market for electric vehicles, to say nothing of the way most people look at them. Now, it’s taking on the energy storage market — one that Elon Musk thinks could be just as big. “I think long-term Tesla Energy will be roughly the same size as Tesla Automotive,” Musk said during an earnings call in July 2020. “The energy business is collectively bigger than the automotive business.”
Ironically, the company is deploying its technology in the very state that could have used it recently: Texas. While the company is doing its best to keep it under wraps, Bloomberg’s reporting revealed that a subsidiary called Gambit Energy Storage LLC is building a 100 megawatt project in the Lone Star state that could power approximately 20,000 homes on a typically toasty Texas summer day.
If Tesla can do for the energy storage market what it did for electric vehicles? Well, let’s just say that all of Musk’s quirks might have to be forgiven.