The Oil and Gas industry is dealing with stakeholder reluctance to invest in future oil and gas developments in Canada.
Emma Grane and Jeffrey Jones reporting in the Globe and Mail, write that Royal Dutch Shell PLC, Exxon Mobil Corp. and Chevron Corp. were recently handed significant defeats over their approaches to fighting climate change. Canada’s Suncor Energy Inc. announced a long-awaited target to achieve net-zero emissions by 2050 that put the oil sands producer’s ambition in line with the federal government’s commitment under the Paris Agreement.
Shareholders – including the world’s largest fund managers – are also forcing companies to account for, and deal with, the risks they face in the global transition to cleaner energy sources. Suncor Energy aims to cut emissions by more than one-third while boosting oil production “Obviously, there’s an enormous amount of attention focused on how we move forward,” Mark Little, Suncor’s chief executive officer, said in an interview. “I think it actually says people are wanting energy companies and oil producers to be part of the solution, and, quite frankly, I think there’s a lot of wisdom in that. “The oil industry globally deploys enormous amounts of capital, it has massive technical project execution and operational capabilities, so it’s hard for me to envision how the world actually achieves its ambition without industries like the oil industry participating in the energy transition.” Suncor’s net-zero plan comprises strategies to meet an interim target of cutting emissions by 10 megatonnes a year by 2030. They include adoption of carbon capture, use and storage; production of low-carbon fuels and hydrogen; fuel switching in its oil sands operations; and renewable power generation, including wind energy. Importantly, Suncor is setting company-wide CO2 targets rather than intensity goals. That’s a departure from most of its Canadian peers, which measure their emissions per barrel produced.1Nick Wells of the Canadian Press reports in the Globe and Mail that a First Nations group criticizes Woodside Petroleum’s move to sell its Kitimat LNG stake. Woodside Petroleum Ltd., an Australian company, says it plans to sell its 50 per cent stake in the 480-kilometre Pacific Trail Pipeline and the proposed LNG facility at Bish Cove.
The First Nations Limited Partnership, which represents 16 First Nations in northern B.C., says the decision to sell is both disappointing and poses a threat to its members’ commercial interests. Woodside’s announcement comes after Chevron Canada Ltd, the operator of the project, said earlier this year that it would stop funding further feasibility work on the project. The company put its interest up for sale in December 2019, but has failed to find a buyer.2
The risk associated with investment in oil and gas in Canada is connected to the need to reduce greenhouse gas emissions in line with IPCC recommendations and IEA plans to achieve global temperature targets.
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