Alberta Premier Danielle Smith key ally for global industry as narrative battle gears up
At the World Petroleum Congress, which kicked off Sunday in Calgary, they’re finally saying the quiet part out loud: energy transition means lowering emissions from oil and gas production and diversifying the global energy mix, not displacing hydrocarbons with renewables. I smell a new narrative strategy.
The oil and gas industry is infamous for foisting new narratives, complete with well-briefed spokespersons and slick PowerPoints, upon a public that doesn’t have the technical expertise to refute them. A couple of years ago, it was “let’s have a frank conversation about energy.” CEOs were recruited to give speeches about how Canada accounted for only 1.7% of global emissions and even if we hit net-zero tomorrow it would have a negligible impact on global warming. Then a 2018 presentation from communications firm Navigator was uncovered that laid out the “climate slow-walking strategy” for the Canadian oil and gas industry. For more information about that campaign, watch my interview with Dr. Sara Hastings-Simon.
The “diversification not displacement” narrative gives off similar vibes. Like a song sheet has been quietly distributed behind the scenes and everyone at the WPC is singing from it.
During the first plenary session, Saudi Aramco CEO Amin Nasser said that talk of peak oil demand “is wilting under scrutiny because it is mostly being driven by policies, rather than the proven combination of markets, competitive economics and technology.” He then attacked the International Energy Agency for drifting into “radical ideology” instead of sticking to economics. Fellow panel member ExxonMobil CEO Darrin Woods echoed Nasser’s skepticism while using the old trope that the world can’t “flip a switch” and transform its energy system.
That afternoon, the African Petroleum Producers Association held a press conference to discuss its 18 members’ ambitious plans to produce more hydrocarbons. Secretary General Omar Farouk Ibrahim, a former OPEC spokesperson, became rather animated when I pointed out that many other reputable forecasters like BloombergNEF and BP were calling for peak oil demand around 2030.
“I have never believed in that because there is no scientific basis to tell me that in the next 20 or 30 years, oil will finish,” he said. My follow up question asking him to consider even a hypothetical peak oil demand scenario was less well received.
“When you make that statement, the first thing I ask, where is that statement coming from? Who’s making the statement? What interests are they protecting? I know for sure that the IEA will say everything it can say in order to scale the world from investing in fossil oils. That’s our position.”
Alberta Premier Danielle Smith repeated the prevailing narrative at her press conference. During my questions, I pointed out that just last week China’s largest refiner, state-owned Sinopec, had forecast peak Chinese gasoline demand later this year and peak diesel demand by 2025. I noted that the Calgary Chamber of Commerce believes the energy transition is an existential threat to the provincial oil and gas sector.
“What if you’re wrong?” I asked. “Is there a Plan B?”
“I like what the Saudi energy minister had to say this morning, you’ve gotta live in the real world, not on computer models,” she answered. “He actually challenged the group to find a single time that the IEA has had a single projection that has been correct. So I think it takes a leap of faith to think that if they’ve never been correct that they will be correct by 2050.”
Smith went on to say that even if gasoline and diesel fuel demand declines, oil consumption for non-combustion uses such as “lubricants, petrochemicals, and construction materials” will grow. Alberta natural gas will pivot, at least to some degree, to being a feedstock for hydrogen.
There’s a teeny bit of irony at play here because Energi Media has argued for years that Alberta should adapt to the energy transition and declining hydrocarbon demand by shifting to producing feedstock for materials manufacturing and low-carbon fuels. But that position was arrived at after sifting through considerable evidence, including interviews with hundreds of global experts, the IEA among them.
There is a strong evidence-based case for peak oil demand later this decade. The global auto industry’s rapid switch from internal combustion engine to electric vehicles, combined with the beginning of exponential growth curves for EV sales, is just one data set. There are plenty more.
The oil industry’s “diversification not displacement” narrative, however, appears to be based upon discrediting the IEA and arguing that the global energy system is too big and entrenched to switch overnight, as if anyone is suggesting that it will. It’s a strawman argument. Every reputable forecaster acknowledges that oil and gas demand will continue long after 2050, though at much lower levels than today. Even the IEA’s net-zero scenario, which came in for some rather petty mocking at the WPC, foresees a mid-century demand of 25 million barrels of oil per day.
Sure, this is the World Petroleum Congress and of course oil and gas boosterism is the order of the day. But shouldn’t an event whose theme is “Energy Transition: the Path to Net-Zero” be less antagonistic toward energy transition models that actually model an energy transition instead of variations on the status quo?
Alberta has been the testing ground for the new energy narrative for several years now. Smith is fully on board. As I’ve argued in several columns, industry leaders are, too.
What if they’re all wrong? Shouldn’t Alberta have a Plan B, just in case?
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