This page provides Cenovus's view on current topics affecting our industry and how they shape the work we do. Topics related to energy don't just affect the industry. They affect all Canadians. Topics like climate change, mandated production curtailments and new pipeline projects.
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Canada targeted (yet again) as a scapegoat for global climate change challenge
Alex Pourbaix, President & Chief Executive Officer, Cenovus Energy
May 14, 2020 – The recent decision by the Norwegian wealth fund, Norges, to pull its investments in Cenovus Energy and three of our oil sands peers is another example of Canada being used as a pawn by institutions attempting to earn climate points. But these announcements are motivated more by public relations than fact. The data they used to assess Cenovus’s greenhouse gas performance is outdated and incorrect.
Here’s what Norges failed to consider in its decision. Cenovus has reduced the emissions intensity of our oil sands operations by approximately 30 percent over the past 15 years. We’ve set ambitious targets to reduce our per-barrel emissions by another 30 percent across our operations by 2030 and hold absolute emissions flat during that time. We are also focused on innovation that will help us achieve our aspiration of net zero emissions by 2050. Our peers have similar emissions reductions achievements and commitments.
The hypocrisy of the move by Norges is particularly rich, given the sovereign wealth fund amassed its $1 trillion value primarily from oil production profits. Moreover, Norway’s former energy minister is on record saying the country will produce oil for as long as oil is used. Energy is important to Norway’s economy, as it is to Canada’s.
The oil and natural gas industry accounts for the largest share of Canada’s exports and is the most significant contributor to the country’s gross domestic product. This country is amassing a huge deficit as a result of the COVID-19 response, with the parliamentary budget officer suggesting our national debt could hit $1 trillion. That’s more than $26,000 for every man, woman and child in Canada. Key to reversing this unprecedented debt load will be secure and stable tax revenue to support the economic recovery. Canada’s energy sector has contributed an average of $8 billion annually to provincial and federal government coffers and its strength is fundamental to ensuring this country emerges from the downturn stronger than ever.
Yet, the Canadian oil sands have become an easy target for primarily European investment firms and insurers who have made a big splash announcing they are severing ties with Canadian companies. Pulling out of the oil sands earns these firms headlines but doesn’t have an impact on their business because most of them were not heavily invested in Canada. Canada’s oil sands have long been the poster child for the anti-oil movement. It’s easier to attack a country that has a regulatory system designed to ensure transparency on its environmental, social and governance (ESG) performance than it is to go after oil producing nations such as Russia and Saudi Arabia where the commitment to regulation and transparency substantially lags Canadian expectations and standards.
As the leader of a Canadian company whose sector contributes billions to the national economy and directly and indirectly employs 800,000 people – including being the country’s largest employer of Indigenous people – I am standing up for our industry and for Canada. Enough is enough with these unwarranted attacks.
Cenovus and our peers are committed to doing our part to help meet Canada’s climate commitments and contribute to global climate change solutions. We’re investing millions in technologies to reduce our own emissions and collaborating with innovators around the world, including the support of initiatives like the NRG COSIA Carbon XPrize, which is focused on solutions to convert greenhouse gas emissions into valuable products and consumer goods.
Canada is the largest oil-producing jurisdiction in the world with a national price on carbon, and Alberta’s cap on oil sands emissions is an unprecedented commitment. Our industry is committed to achieving Canada’s 45 percent reduction target for methane emissions, addressing a greenhouse gas that is more potent than carbon dioxide. If investors are truly concerned about global greenhouse gas emissions, they should place greater value on Canadian oil and natural gas.
The world is undergoing an energy transition as action is taken to limit global temperature rise. Canada’s energy sector is going to play a key role in supporting the transition. But as we see today, energy and economic growth are inextricably linked and even the most aggressive emissions-reduction scenarios recognize that oil and natural gas will continue to be a significant part of the energy mix for decades to come. Canada has the world’s third largest oil reserves and a significant opportunity to provide the world with the low cost, lower carbon energy it demands.
Just as support for a strong energy sector has benefitted Norwegians, it’s essential for Canadians to recognize the importance of Canada’s energy sector in contributing to our collective economic future.
Throughout 2018 the price differential between Western Canadian Select (WCS) oil and West Texas Intermediate was 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. In the latter half of 2018, production output exceeded takeaway capacity, leaving the industry in an unsustainable situation. This created 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. If left unchecked, one of the largest contributors to the Canadian economy would continue to receive virtually nothing for its product, impacting investment in the country, jobs, government revenues, taxes and much more.
On December 2, 2018, 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 supported the government’s difficult decision and fully backed this temporary, short-term measure to relieve this extraordinary situation. This province-wide curtailment has helped bring production in line with takeaway capacity and reduced record-high oil storage levels that have directly contributed to wide differentials. It has also helped ensure that all Albertans will be able to 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 (WTI) 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 $2.7 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’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.