We had an excellent Technical Session with the CEO from High Ground Energy, Heather Christie - Burns who gave us some great highlights on the challenges we repeatedly face in our industry but also the opportunities the sector has to offer on many different scales.
Heather has been in the industry for many years and has had exposure to innovations in technology, change in market demands, environmental considerations and concerns and how to manage all of this on a local and international scale. Her three main topics of discussion were;
1. What's happening with OPEC, the US, and everyone else when it comes to oil supply
2. Does the world need more oil and what about demand?
3. What about Canada?
4. Opportunities in the Calgary market
With a lot of change in our current economy there really is a lot to consider when looking at the future of our industry. Heather gave a really great synopsis of the price of oil and it's volatility in the market place over time. She explained that 'demand continues to increase as the world's economies are projected to grow. Oil and gas will occupy a smaller part of the larger energy "pie" but as the pie grows so does the demand.
This gave a positive spin on what our market looks like at the moment and Heather explains that for many years this has been the trend where the supply of our commodity eventually catches up to the demand, exceeds it and then takes time to level off and fall again for the demand to then increase. This is a normal transition and something that she has seen a few times in her career but is hard to forecast.
The crash we faced recently was due to an over supply and less demand in the market but as mentioned this is a normal transition. We will see our industry boom and bust again and it is difficult to predict why and how this happens.
Heather did mention some indicators that can help predict the crashes we face in the industry. These vary from trends, innovations in energy production and government regulations. One major trend that economists and analysts are following now is the introduction of the electric car. Although the car has introduced as an innovative and alternative source for vehicles Heather points out that there are a lot of elements that need to develop cohesively for the car to substitute the vehicles we have now.
In order for electric vehicles to take over market share "governments must offer incentives to lower the costs." In addition manufacturers of these vehicles need to accept that their profit margins will be significantly lower on the vehicles. Finally, consumers will be paying significantly more to drive these vehicles in substitute of what they have now. Until the cost of the battery comes down, these vehicles will be extremely expensive to manufacture, operate and to purchase.
These factors are a strong indicator that another crash is likely not to occur in the near future and at the severity we just faced. There are always other trends and elements to monitor as our industry grows and important to remember that there are many elements that determine how our economy grows stronger and more resilient.
The reality is that petrochemicals are seen as the strongest source of global oil demand growth in 2015 - 2040. Alberta leads with the oil sands production for how Canada plays in this market however; lack of new investments and infrastructure make Canada a risky investment of international interest.
Heather mentions that alternative NGL options are readily available and a great market and opportunity for Canada to embark. "Canada’s heavy oil industry is here to stay and so is blending to get Canadian crude to refining markets in the U.S. and eastern Canada." She states that utilizing this infrastructure will boost our boost our opportunity to work with the U.S. on safe and consistent transportation methods that transport heavy oil to and from the U.S.
Additional opportunities that Canada can focus on are environmental and remediation standards through well abandonment and reclamation. Canada is leading in it's environmental standards on a global scale and this is something we can focus on continuing to take leadership in through setting a precedent moving forward. "In these economically and politically uncertain times, environmental groups and the general public are urging politicians and regulators to set aggressive abandonment and reclamation timelines and hold the industry accountable." This will uphold this standard and establish Canada as a lead environmental regulator with oil and gas.
Canada can continue to focus on developing partnerships with various stakeholders in the industry. Heather gave the example of the partnerships with aboriginal communities and how important these are to moving our industry forward. "What’s sure is that the impact of energy development on Canada’s indigenous population is widespread. One in four of Canada’s First Nations has energy rights and interests. The oil price crash that is devastating the industry and slashing government revenue has also done harm to aboriginal communities through reduced business, employment and revenue opportunities." Partnering with these communities will set our standard for developing strong relationships that will develop and last throughout the transitions and changes in our economy.
The final opportunity that Heather mentioned was that of technology and more specifically the digital oil field. There are many innovative ways that technology can expand and develop the way we monitor operating sites and plants. With drones and digital features on site significant safety standards can be implemented taking out the human element on dangerous on site activities. Many of these types of monitoring activities have been implemented to plants that are operating now with great results.
Overall, Heather has an exceptional background in the industry and with that had a great view on both the challenges and the opportunities in our industry. We can all be optimistic about the changes and transitions in the sector as time develops and we all play a large part in creating that environment. Research, analysis and continuous monitoring will help us to understand the changes and trends in the market to develop our industry further and keep Canada as a leader in the market.