Business/economics

Hard Times in Canadian Oil Could Be Useful Experience

Its reward for years of struggling to adapt to low prices and weak demand for its oil and gas has been an epic crash. Canadians selling change say it is time to consider possibilities that seemed inconceivable in the past.

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Source: Getty Images.

Combine a pandemic, plunging oil demand and prices, and a deep recession, and then consider how it may change things.

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It is not a question Steve MacDonald can answer, but the chief executive officer for Emissions Reduction Alberta (ERA) said it can be a useful way to get people to consider how things can change in unexpected ways.

“If you said to someone 4 months ago that oil could go to negative prices, they would say, it’s not going to happen. The range of what could happen is much wider now,” he said.

A recent decision by the $1-trillion Norwegian Wealth Fund to exclude four major oil sands companies saying they have “unacceptably high greenhouse emissions” shows the need for change.

The headlines in Canada have been harsh—the rising death toll from COVID‑19, oil prices flirting with zero, job cuts, and the slow and unpredictable timeline to normal life.

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“Everything you’re hearing is true. It’s bad,” said Darcy Spady, but the 2018 SPE president is quick to add, “I see a ray of sunshine.”

There is a connection between the bright and the dark sides, and it is forcing leaders from both inside and outside the industry to take a hard look at what works and what does not.

“The pandemic has merely accelerated the disruption that was already occurring in Canada’s oil and gas sector,” wrote Kevin Krausert, the president and chief executive officer of Beaver Drilling, in an essay in a national newspaper, The Globe and Mail.

The essay addressed a long-term future in which the industry undergoes fundamental changes, ranging from research into ways to make hydrogen fuel from gas to drillers digging geothermal wells to provide renewable energy.

But at the moment, it is difficult to get the attention of decision makers about the future.

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“It is hard to focus on anything but the here and now. Where the next dollar is coming from rather than from 3–10 years from now,” said Mark Scholz, president of the Canadian Association of Drilling Contractors.

Staying Alive

The dramatic drop in oil demand and prices can kill jobs, companies, and ideas.

MacDonald sees that threat firsthand.

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