ARC ENERGY IDEAS

This week on the podcast we discuss the Canadian Federal Government’s July 2022 discussion document “Options to Cut Oil and Gas Sector Greenhouse Gas Emissions to Achieve 2030 Goals and Net-Zero by 2050.”    Joining the discussion is our guest Sander Duncanson, Partner, Regulatory, Environmental, Indigenous and Land at Osler, a Canadian business law firm.There are two policy options being proposed.  Option one is a new cap-and-trade system for the oil and gas sector in addition to the existing provincial carbon pricing systems already in place.  Option two proposes to modify the existing carbon pricing systems in each province, setting more stringent rules for oil and gas.Jackie, Peter and Sander express a number of concerns about the proposal; the inefficiency of pricing carbon higher for one sector of the economy, the potential for unintended consequences from overlapping policies, including the potential to harm to smaller oil and gas producers, and the policy could potentially face legal challenges from the provinces creating uncertainty that could ultimately slow down investment and reduction in GHG emissions. The discussion document is asking for feedback to be submitted by September 30, 2022 and sent to PlanPetrolieretGazier-OilandGasPlan@ec.gc.ca. We encourage people to participate and express their views on the proposed cap on emissions.Content referenced in this podcast:“Eradicating the Smoke Nuisance” from Energyphile.orgOptions to Cut Oil and Gas Sector Greenhouse Gas Emissions to Achieve 2030 Goals and Net-Zero by 2050.”    Please review the ARC Energy Institute disclaimer.

The final rule for Canada’s Clean Fuel Standard (CFS) was published in the Canada Gazette on July 6, 2022.   By 2030, the rule aims to reduce the emissions for Canadian suppliers of gasoline and diesel by over 15 percent (compared with 2016).This week on the podcast, Jackie and Peter talk about the new rule.  While a draft version was published in December 2020, the final rule had some unexpected revisions. They also talk about Alberta carbon policy.  The provincial government issued a document for feedback on proposed changes to the large emitter program, called Technology Innovation and Emissions Reduction (TIER).Content referenced in this week’s podcast: -        The Final Canadian Clean Fuel Standard -        A Review of Alberta’s Technology Innovation and Emissions Reduction (TIER) RegulationPlease review the ARC Energy Institute disclaimer. 

This week on the podcast, Jackie and Peter try a new format discussing and debating a number of recent news headlines, including:Citi Says Oil May Collapse to $65 by the Year-End on Recession (July 5, 2022) Video of Stuart Kirk, HSBC head of responsible investing at the Financial Times Moral Money Event Video (May 2022)Mining Industry Warns Energy Transition Isn’t Sustainable (July 3, 2022)EV prices soar, as one exec warns of market “collapse” if they don’t get cheaper (July 5, 2022)Clean Energy Canada’s report that compares the total ownership costs of electric cars to the gas equivalents, titled The True Cost (March 30, 2022)Deutsche Bank raided by authorities over ESG ‘greenwashing’ claims: We’ve found evidence that could support allocations of prospectus fraud (May 31, 2022)SEC is Investigating Goldman Sachs over ESG Funds (June 10, 2022) Please review the ARC Energy Institute disclaimer.

Earlier this year Cheniere Energy and ARC Resources announced a new supply agreement to export Canadian gas from an LNG facility located on the US Gulf Coast. This week on the podcast, Anatol Feygin, Executive Vice President and Chief Commercial Officer at Cheniere and Ryan Berrett, Senior Vice President, Marketing at ARC Resources tell us more about their agreement. Here are some of the questions that Jackie and Peter ask them:  How well positioned is North America versus other potential LNG suppliers to Europe?  By 2030, how much will US LNG exports grow compared with today?  Considering the long transportation distance, does it make economic sense to export Canadian gas from the US Gulf Coast?   With the increasing pull from international markets, do you expect North American gas production will grow? Are ESG attributes important to buyers of LNG?See the press release about the Cheniere Energy and ARC Resources supply agreement: https://lngir.cheniere.com/news-events/press-releases/detail/247/cheniere-corpus-christi-stage-iii-and-arc-resources-signPlease review the ARC Energy Institute disclaimer. 

This week on the podcast we talk about Jackie’s recent op-ed “Blackouts Could Drive a Return to Home Solar” with our guests Gursh Bal and Kai Fahrion, who are the Co-CEO’s of Zeno, a residential home solar solutions provider. Jackie’s op-ed argues that, while reducing power bills has been the historical reason for installing rooftop solar, the biggest push in the future will come from the increasing risk of power outages due to extreme weather. Electric vehicles and new financing options are other factors that are reducing the barriers to adoption. Here are some of the questions Peter and Jackie asked Gursh and Kai:  What is the typical size, cost and payback on a home solar installation?  How can the Ford F-150 Lightning electric truck’s bidirectional feature increase home energy security?   Could a Canadian home go off-grid with these solutions? What is the outlook for residential solar? What are the common concerns when people consider home solar?Other content referenced in this week’s podcast:Zeno’s documentary on Peter’s home solar installationCheck out Zeno’s website: www.livezeno.com  Please review the ARC Energy Institute disclaimer.

Kiewit is one of North America’s largest construction and engineering organizations.  As such, the company has a unique perspective on the pipeline of new infrastructure projects in the United States and Canada.To get a window into what is on the horizon for large energy infrastructure projects, Kiewit’s Matthew Thomas, Vice President, Carbon Capture and Travis Shearer, Vice President, Markets & Strategy, Oil, Gas and Chemicals join this week’s podcast.Here are some of the questions Peter and Jackie ask them:  To what extent are inflation and higher interest rates impacting the pipeline of new infrastructure projects?  What is the outlook for carbon capture projects in North America?  Do you expect blue and green hydrogen projects to be constructed? How has the interest in North American LNG changed since Russia invaded Ukraine?  What other types of clean energy projects are under development? Other content referenced in this week’s podcast includes:From the Energyphile collection, the vignette of “The Methane Pioneer” about an LNG tanker that departed the United States for Europe in 1959   Learn more about Kiewit at: www.kiewit.com/Please review the ARC Energy Institute disclaimer.

In the depths of the COVID pandemic, oilfield activity ground to a halt and service companies were forced to shrink.  While oilfield activity levels have rebounded significantly, they are still below the pre-pandemic peaks. This week, Steve Glanville, President and Chief Operating Officer of STEP Energy Services and Shawn Martens, Co-Founder, VP of Operations at IronSight join the podcast.Here are some of the questions that Peter and Jackie ask:  How much inflation are you seeing now?  Is there a labour shortage for oil and gas workers? If North American E&P companies decided to ramp-up their oil and gas production, would oilfield services be a constraint to growth?  Are oilfield service companies likely to invest in new equipment?  Are E&P companies early adopters or laggards when it comes to digital technology? Other content referenced in this week’s podcast includes:From the Energyphile collection, the vignette of the “Investor Visit”  Peter’s written and audio story from the Energyphile collection “The Investor Visit” when a CEO hosts an investor to visit his oil well in 1915 and provides some timeless adviceSTEP Energy Services website: https://www.stepenergyservices.com/IronSight app website: https://ironsight.app/Please review the ARC Energy Institute disclaimer.

The broad-based Invesco WilderHill Clean Energy ETF is off 60% from its peak in early 2021.  Riskier stocks on the clean energy spectrum have fallen even more.  For a more in-depth perspective, please see Peter’s commentary titled “What is Next for Clean Tech Companies” that explores how the beat-up equity markets will impact clean energy companies going forward and their strategies. To start off this week’s podcast, Jackie and Peter discuss the recent changes in the oil market, including the European Union’s decision to ban Russian oil and the news that OPEC+ will pump more oil this summer than initially expected. Other content referenced in this week’s podcast includes: From the Energyphile collection, the Standard Oil Bulletin about the end of coal.Peter’s written and audio story from the Energyphile collection  “Hubris Defined” - A cautionary tale about arrogance based on the Standard Oil Bulletin of October 1914 about the ease at which coal would be replaced by oil. The WSJ article “ Silicon Valley Investors give start-ups survival advice for downturn.”  Please review the ARC Energy Institute disclaimer.

Natural gas price has been climbing to near record highs in North America.  This week, Jackie and Peter talk about the reasons for high natural gas prices now.Longer term, North American gas markets are undergoing a structural change. To reduce their reliance on Russia, EU countries are turning towards new gas suppliers including the United States. Consequently, a US build-out of LNG export capacity is starting.  The pull from more Canadian and US gas going overseas will change the gas markets. Peter and Jackie finish the podcast talking about the history of natural gas which has undergone many transitions. It started with coal gas and transitioned to nature or natural gas. The United Kingdom was once importing gas from the United States, then Europe grew domestic supply and imported more Russian production. Now the EU is transitioning away from Russia.  In the future, gaseous fuels are likely to transition towards clean hydrogen and Renewable Natural Gas (RNG).Please review the ARC Energy Institute disclaimer.

While the Battle of Alberta is front page news, this week Jackie and Peter take a break from hockey and talk about some other game-changing local headlines.  First, they talk about the political change with Premier Jason Kenney announcing that he is stepping down as leader of the United Conservative Party (UCP).  Next, an Alberta court found the Impact Assessment Act (formerly Bill C-69) to be unconstitutional.  The Act defines the review process for large energy infrastructure projects in Canada.After that, an update on the Canadian oil and gas industry’s fiscal pulse.  With higher oil and gas prices, the outlook for revenue and cashflow for 2022 has increased and can be viewed on the last page of our weekly ARC Energy Charts publication.  Today’s higher prices have significant implications for royalties, specifically, speeding up the timeline for oil sand projects to achieve the higher post-payout royalty rates.  Finally, Peter and Jackie weigh in on the debate about who should pay for Carbon Capture and Storage (CCS) – federal and provincial governments, or industry. Here's the Calgary Herald article Jackie mentions re carbon capture Please review the ARC Energy Institute disclaimer.