This page provides Cenovus's view on current topics affecting our industry and how they shape the work we do. Hot topics related to the energy industry don't just affect the industry. They affect all Canadians. Topics like climate change, a price on carbon and new pipeline projects.
To share your perspective, contact us at email@example.com.
Throughout 2018 the price differential between Western Canadian Select (WCS) oil and West Texas Intermediate has been volatile, reaching record levels late in the year. The widening differentials*, and corresponding collapse in the price of WCS, were caused by Canada’s inability to get new pipelines built that are required to support Alberta’s growing oil production. Production output now exceeds takeaway capacity, leaving the industry in an unsustainable situation. This is a competitive issue for Alberta and for all of Canada and it threatened to be a crisis for the oil and gas industry in 2019. When one of the largest contributors to the Canadian economy is receiving virtually nothing for its product, that impacts investment, jobs, government revenues, taxes and much more.
On December 2, the Government of Alberta made the decision to curtail oil production by 325,000 barrels per day or 8.7%, starting January 1, 2019. We applaud the government for making this difficult decision and we support this temporary, short-term measure to relieve the extraordinary situation Alberta finds itself in until more rail and pipeline takeaway capacity come online late next year.
This province-wide curtailment will help bring production in line with takeaway capacity and reduce record-high oil storage levels that have directly contributed to wide differentials. It will also help ensure that all Albertans will benefit from the resources that they own through royalty payments to the provincial government.
Read our media statement in support of the Alberta Government’s decision (December 2, 2018).
*Differential is a term that refers to the difference in price between two different types of oil. In this instance, Canada’s heavy crude usually trades at a discount because of refining and transportation costs, so a price gap or differential is typical between West Texas Intermediate (WT) and WCS. The difference is typically between $10-15 dollars a barrel but reached levels higher than $50 a barrel in November 2018.
In May 2016, the Government of Canada joined Alberta in announcing that it is adopting the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP).
The Canadian Association of Petroleum Producers has expressed its support for the adoption of UNDRIP in a way that is consistent with the Constitution and Canadian law, and Cenovus is fully aligned with that position.
We believe the declaration provides a framework for reconciliation in Canada and establishes an important set of standards to help ensure Indigenous rights are respected around the world. We also believe that meaningful consultation is at the heart of the declaration. By engaging in meaningful consultation, industry and Indigenous communities can better understand potential issues related to development and can work together to mitigate them even before projects begin.
At Cenovus, we have always strived to meet or exceed the requirements for consultation by engaging in respectful and ongoing discussions with our Aboriginal neighbours. Through this approach, we’ve built strong working relationships that have allowed us to complete decades-long community agreements with many of the Indigenous communities near our operations. These agreements provide funding that can be used for community enhancement, heritage projects and education and training to help community members participate in job opportunities. We also work to create business opportunities wherever possible. Since 2009, Cenovus has spent approximately $1.8 billion doing business with Aboriginal companies.
At Cenovus, our mission is to maximize the value of our company by responsibly developing oil and natural gas assets in a safe, innovative and efficient way. That includes finding the right balance between minimizing our environmental impacts and maximizing our efficiency so that we can remain both cost and carbon competitive. We believe that technology and innovation are key to reducing both costs and emissions. We recognize that there are growing concerns globally about the effects of climate change and that the transition to a lower-carbon economy is already underway.
To learn more about our work and the actions we’re taking to address climate change in our work, visit our climate change page.
We support a price on carbon – for the companies that produce oil as well as the consumers who use the product – and have since we launched as a company. We believe the funds from a price on carbon should be directed toward the development of new technologies that will further reduce greenhouse gas emissions. Having a price on carbon is one of the fairest and best ways to stimulate innovation to reduce the emissions associated with oil, while protecting the competitiveness of Canada’s oil industry on an international playing field. We support the government of Alberta’s climate change plan related to the oil and natural gas industry, which includes a carbon pricing regime coupled with an overall emissions limit for the oil sands. These measures provide greater predictability and certainty for producers to invest in the growth of this significant Canadian resource while also addressing global concerns about climate change.
Read more about our support in this news release.
We’re supportive of all projects that would open up access to new markets for our oil. Pipelines have proven to be the safest and most efficient means of moving oil from production fields to refineries. Of all the oil and refined products Canadian and U.S. pipeline companies transported between 2002 and 2016, 99.999 percent was transported safely1. Stringent monitoring is in place and helps to minimize the occurrence of an incident. Emergency response plans and procedures are also a critical component of safe pipeline operation. These plans allow pipeline operators to respond effectively and quickly to any emergency that could impact the public and the environment.
We believe expanding pipeline capacity is in the interest of all Canadians. Without access to new markets, Canada's oil industry will continue to receive a lower price for oil products because we're limited to primarily one customer - the United States. New pipelines that provide access to marine ports will create opportunities to sell our oil to new customers all around the world, which will benefit the entire Canadian economy.
We support new pipeline projects, including Kinder Morgan’s Trans Mountain Expansion pipeline to the West Coast, as well as TransCanada’s proposed Energy East pipeline to the East Coast. These projects will be state-of-the-art and use steel and anti-corrosion coatings. They will be among the strongest and safest pipelines ever built.