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Why Ontario should care about Alberta energy production · Kvetch & Release

• 0:00
  Speaker 1: I like to talk often about the energy sector when
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  Speaker 1: I'm here on AM eight hundred CKLW. I find it
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  Speaker 1: to be incredibly interesting. It's fascinating. The politics of it
• 0:09
  Speaker 1: are really interesting. Just the technology that's involved in this
• 0:12
  Speaker 1: energy transition that we're watching is incredible. And then, of course,
• 0:16
  Speaker 1: you know, just the traditional oil and gas sector, there's
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  Speaker 1: so many inter moving parts. It's complex, it's dynamic, and
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  Speaker 1: again the politics there are immense. Joining me right now
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  Speaker 1: just to discuss how does Alberta's energy decisions affect us
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  Speaker 1: here in Ontario, because, let's be honest, Alberta is typically
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  Speaker 1: where the focus goes when it comes to energy discussions
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  Speaker 1: about Canada and the energy transition. Joining me right now
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  Speaker 1: is the publisher and CEO of Energy Media, Markham. Hisslop
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  Speaker 1: joins me, Markham, how you doing?
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  Speaker 2: I'm good, John? Is it really thirty five? And wins
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  Speaker 2: it is?
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  Speaker 1: It's with the humid X. Yeah, it's it's hot, it's hot, hot, hot.
• 0:55
  Speaker 2: Oh good lord man. You need to get a heat pump.
• 0:59
  Speaker 2: We had one installed in our house a couple of
• 1:00
  Speaker 2: years ago and have It's incredibly efficient and so comfortable
• 1:05
  Speaker 2: on days like today, go out, run down to home
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  Speaker 2: depot after you're done your interview, your show, Grab a heatpup.
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  Speaker 1: Okay, are you getting a commission on this? Like? Do
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  Speaker 1: you have a side hustle?
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  Speaker 2: Come on, I'm not.
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  Speaker 1: I just love the technology absolutely. Hey, so listen, you
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  Speaker 1: sent me over a couple articles here that you've written,
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  Speaker 1: specifically talking about a University of Alberta energy transition training course.
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  Speaker 1: You know, I want to talk though, just broadly, and
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  Speaker 1: we can go into what you've written, like when it
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  Speaker 1: comes to Alberta and energy production and this transition, Why
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  Speaker 1: should Ontarians even pay attention to this segment? I can
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  Speaker 1: imagine I'm listening right now to people turning the dial
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  Speaker 1: to the FM side and listening to music, be getting
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  Speaker 1: just bored by this conversation. But it's incredibly important. Why
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  Speaker 1: should people care about Alberta and energy production?
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  Speaker 2: Oh? They should absolutely stay here. Not because I'm more
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  Speaker 2: interesting in the latest whoever the Barroccan music is. But
• 2:03
  Speaker 2: this is I don't do you remember Stephen Harper former
• 2:07
  Speaker 2: Conservative Prime Minister Stephen Harper saying that Canada should be
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  Speaker 2: an energy superpower Canada when it comes to oil and gas,
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  Speaker 2: Canada is already the fourth largest producer of oil and
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  Speaker 2: the fifth largest producer of natural gas in the world.
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  Speaker 2: We're already a superpower. Oil and gas is the biggest export,
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  Speaker 2: Canada's biggest export by far, like literally twice as much
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  Speaker 2: as the auto sector, which is mostly based in Ontario
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  Speaker 2: in Windsor. So the oil and gas sector is incredibly
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  Speaker 2: important to the Canadian economy. I think it's you know,
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  Speaker 2: like one hundred and eighty thousand Canadians are employed there
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  Speaker 2: and almost all of it is either comes from Alberta,
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  Speaker 2: which is about seventy five to eighty percent of production,
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  Speaker 2: or it's controlled by companies that are based in Alberta.
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  Speaker 2: So Alberta is the epicenter of the Canadian oil and
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  Speaker 2: gas industry, which is hugely important on the global scene
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  Speaker 2: and probably doesn't get the recognition that it deserves. That
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  Speaker 2: being said, and then of course, you know, it's a
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  Speaker 2: big driver of the Canadian economy. So that being said,
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  Speaker 2: the global energy transition to clean energy transition is an
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  Speaker 2: existential threat to either the existence of that industry or
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  Speaker 2: to its profitability long term, because this is not a
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  Speaker 2: boom and or bust kind of scenario. This is a
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  Speaker 2: structural demand change in demand for hydrocarbons, and that means
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  Speaker 2: this is it's all different than it was in the past.
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  Speaker 2: This is not your granddaddy's boom and oil and gas
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  Speaker 2: boom and bust.
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  Speaker 1: So things are changing. We know that this transition is here.
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  Speaker 1: I would imagine that the oil and gas companies are
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  Speaker 1: looking at the transition going hey, if that's where the
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  Speaker 1: money's going, we're in this sector energy production. More broadly speaking,
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  Speaker 1: are they looking to dive head for into this or
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  Speaker 1: is it new companies that are up and coming that
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  Speaker 1: are really taking market share.
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  Speaker 2: Well, there's something that's called the innovators sorry, the incumbents dilemma.
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  Speaker 2: So if you're an existing big company in an industry
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  Speaker 2: and your industry is disrupted by new technology that takes
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  Speaker 2: away customers, basically you have three options. So one is
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  Speaker 2: you can give up your business model for a different
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  Speaker 2: business model. So in Denmark, the Danish oil and gas
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  Speaker 2: company became orsted the world's leading wind company. Or you
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  Speaker 2: can pivot. You can kind of re engineer your existing
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  Speaker 2: business model to something that's similar. So the sun Core,
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  Speaker 2: for example, and VP, the big British oil company, they
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  Speaker 2: looked at re engineering their business models to become more
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  Speaker 2: clean energy than oil and gas, or you can do
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  Speaker 2: the third thing, which is what Alberta has done, and
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  Speaker 2: that is double down on the status quo. And that's
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  Speaker 2: my problem with this training course. And if you want
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  Speaker 2: to get a coffee, John, It'll take me a couple
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  Speaker 2: of minutes to explain it to your to your listeners, Like,
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  Speaker 2: if you want to do it, that was a good time.
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  Speaker 1: Well, I mean, I I do want to know why
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  Speaker 1: this doubling down or tripling down. I suppose you could
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  Speaker 1: look at it. Why they would want to continue to
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  Speaker 1: look this way or is it just simply that you
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  Speaker 1: know the government is on their side and they know
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  Speaker 1: that they can pull this off. Like okay, let's talk
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  Speaker 1: about your piece.
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  Speaker 2: Yeah, no, here's here's where what it comes down to.
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  Speaker 2: So this is a piece that is it's a joint
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  Speaker 2: venture between an Alberta organization, I think it's Energy Executives
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  Speaker 2: and the University of Alberta. It's moderated by Professor Brad Hayes,
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  Speaker 2: who is a adjunct professor in the Earth Sciences Department.
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  Speaker 2: He is a geoscientist, which is basically helps you know
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  Speaker 2: oil and gas companies find oil and gas reservoirs, and
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  Speaker 2: exploit them. He's very good at that. I want to
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  Speaker 2: make this very clear, this is not an attack. I'm
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  Speaker 2: Brad Hayes, but he's not an energy transition expert. He
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  Speaker 2: is an oil and gas guy. And so they put
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  Speaker 2: together this eight to ten hour course. It's twenty seven
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  Speaker 2: to twenty eight modules. It's mostly video of various people,
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  Speaker 2: including Hayes, explaining the energy transition. And here's where I
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  Speaker 2: take issue. So there are, according to this course, two
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  Speaker 2: basic narratives explained how we should respond to the transition
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  Speaker 2: to clean energy. The first one, which I call the
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  Speaker 2: Oil and Gas Forever, is essentially that the energy transition
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  Speaker 2: is gonna be very slow. We're really because of global
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  Speaker 2: growth in global population and the growth in emerging economies,
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  Speaker 2: is the demand for oil and gas. It really isn't
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  Speaker 2: going to go down. This is opex narrative. We're going
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  Speaker 2: to see actually significant growth in oil and gas out
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  Speaker 2: to twenty forty five twenty fifty, and then even if
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  Speaker 2: there's a decline, it'll be very slow after twenty fifty.
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  Speaker 2: So we've got decades and decades left to exploit and
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  Speaker 2: increase our production and consumption of oil of Alberta's oil
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  Speaker 2: and gas.
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  Speaker 1: Flowers and rainbows.
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  Speaker 2: Flowers and rainbows and unicorns. Man, that's what it's all about.
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  Speaker 2: And how often do you hear Alberta Premier Danielle Smith
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  Speaker 2: saying we should be doubling oil production, we should be
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  Speaker 2: increasing LG exports off the west coast. It comes out
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  Speaker 2: of that narrative. And we heard it in Calgary in
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  Speaker 2: September when the World Petroleum Congress was there, Saudi A
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  Speaker 2: Ramco was there. This is the big this is the
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  Speaker 2: only thing people were talking about, is this narrative. The
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  Speaker 2: second narrative is what I call world is on Fire,
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  Speaker 2: which is basically the climate science argument. And you know,
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  Speaker 2: we've all or the climate change argument, where basically the
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  Speaker 2: climate science says we're warming up and we're already seeing
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  Speaker 2: you know, droughts and floods and wildfires in Western Canada,
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  Speaker 2: all of the things that climate scientists have talked about
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  Speaker 2: for a long time. But what the advocates for the
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  Speaker 2: other narratives say is, yeah, okay, what's really important here
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  Speaker 2: is we can't lose all of the benefits from hydrocarbons
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  Speaker 2: from fossil fuels. Generally, we have to So the important
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  Speaker 2: thing in the short term is that we decarbonize our hydrocarbons.
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  Speaker 2: We reduce the greenhouse gas emissions that are created when
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  Speaker 2: we produce when we extract oil and gas out of
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  Speaker 2: the ground. So let's do that first and then we'll
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  Speaker 2: worry about the other stuff, kind of down the road,
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  Speaker 2: the eighty percent of the emissions that come from actually
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  Speaker 2: burning oil and gas. Here's my problem. There's a third
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  Speaker 2: narrative here, really.
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  Speaker 1: And there's one between the two extremes.
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  Speaker 2: Well, believe it or not. And this was totally annoyed
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  Speaker 2: and are ignored. And this is why I'm so critical
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  Speaker 2: of this course is I call it the future is Electric,
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  Speaker 2: and in fact it's the basis of the ten years
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  Speaker 2: of my energy transition journalism. And there's something different about
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  Speaker 2: this energy transition, because we've had lots of them, John,
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  Speaker 2: over the centuries. We've had we've had wood and dung
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  Speaker 2: and whale blubber as fuel, and then we had you know,
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  Speaker 2: the fossil fuels, coal, oil and gas. We've had We've
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  Speaker 2: had other energy transitions over the last two three, four
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  Speaker 2: thousand thousand years. This one is different, This one really
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  Speaker 2: is different. The other ones were all based on a
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  Speaker 2: commodity you know, an oil, a gas, something you dig
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  Speaker 2: up out of the ground and then you combust it.
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  Speaker 2: This one is a technology. This one is solar panels
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  Speaker 2: and wind turbines and advanced geothermal and advanced nuclear and
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  Speaker 2: a whole bunch stuff that you make in a factory.
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  Speaker 2: And when you make it in a factory, it obeys
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  Speaker 2: entirely different laws. It obeys like the laws of electronics manufacturing,
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  Speaker 2: things like Right's law, Moore's law. The learning curves all
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  Speaker 2: of those, and that's why we see China investing hundreds
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  Speaker 2: of billions of dollars in scaling up its manufacturing of
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  Speaker 2: solar panels, for example, some batteries.
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  Speaker 1: Electric production will get better, efficiency will get better, things
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  Speaker 1: will continue to evolve and improve, not like just burning
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  Speaker 1: a log.
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  Speaker 2: As you said, exactly right, and the future is electric narrative,
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  Speaker 2: which I've been working on for a long time, excuse me,
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  Speaker 2: does a much better job of explaining the modern energy
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  Speaker 2: transition than the oil and gas forever a narrative does so.
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  Speaker 2: The problem the issue here is I wrote a column
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  Speaker 2: that I admit is a little was a little insulting.
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  Speaker 2: I kind of poked fun at the University of Alberta
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  Speaker 2: course they called it boring and a couple of other things.
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  Speaker 2: And what's interesting here was the reaction that was absolutely
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  Speaker 2: at the Alberta oil brows went apoplectic, and some of
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  Speaker 2: them were kind of establishment folks. You know, there were
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  Speaker 2: people calling for my energy media or company to be
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  Speaker 2: defunded and basically canceled. How dare we do this thing?
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  Speaker 2: How dare we criticize One commentator even went so far
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  Speaker 2: as to say that journalists like me should know in
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  Speaker 2: Alberta which side of the bread is. You know, our
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  Speaker 2: bread is butter. I mean, this is outrageous kind of stuff.
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  Speaker 2: And what it is is I finally poked them in
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  Speaker 2: a source spot. This is they They do get it
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  Speaker 2: at some level that the narrative, the way they view
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  Speaker 2: the future of energy in the world and in Canada
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  Speaker 2: is in their self interest. Yes, it's not in the
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  Speaker 2: interest of the rest of the self of Canadians and
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  Speaker 2: it doesn't really accord with reality. And what I argued
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  Speaker 2: for in the column, actually two columns that I wrote,
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  Speaker 2: was a different energy conversation at the national level here
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  Speaker 2: in Canada. We need to start. We need to reject
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  Speaker 2: this fantasy that is oil and gas forever and start
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  Speaker 2: to say, okay, change is coming. The IEA says that after,
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  Speaker 2: you know, peak oil demand is arriving at twenty thirty,
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  Speaker 2: what do we do afterwards? How do we maintain that
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  Speaker 2: tax revenue? How do what do we do about jobs?
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  Speaker 2: We have to get you know, people have to be employed.
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  Speaker 2: What are we going to do for on the clean
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  Speaker 2: energy side? On and on and on and on. And
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  Speaker 2: it has a big effect on Ontario because a part,
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  Speaker 2: a big part of the Ontario economy is manufacturing. And
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  Speaker 2: of course we're talking about technology manufacturing. You're already the
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  Speaker 2: governments of Ontario and Canada are investing in battery plants
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  Speaker 2: and ed plants. What else can we do to build
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  Speaker 2: out that clean energy in a manufacturing base. That's the
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  Speaker 2: kind of conversation we need to have, not the conversation
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  Speaker 2: that's envisioned in the University Developer's training course.
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  Speaker 1: So it doesn't have to necessarily just be unicorns and rainbows,
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  Speaker 1: but it also doesn't have to be light your hair
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  Speaker 1: on fire and start screening about things. There can be
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  Speaker 1: a nuanced conversation. Can you believe that.
• 13:03
  Speaker 2: Markham, here's a good one. And you and I have
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  Speaker 2: talked about this in previous interviews John the oil sands bitchumen,
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  Speaker 2: that heavy, gooey peanut butter buttery stuff that we process
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  Speaker 2: and then send off to American refineries to make into
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  Speaker 2: gasoline and diesel. There's an organization, it's actually a provincial
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  Speaker 2: agency called Alberta Innovates. It has been working since twenty
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  Speaker 2: sixteen on turning that very unique hydrocarbon molecule is not
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  Speaker 2: another one like it in the world into materials like
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  Speaker 2: carbon fiber and asphalt binder, the stuff you make with
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  Speaker 2: roads with and activated carbon materials. And I interviewed I
• 13:45
  Speaker 2: talked to doctor Ibraham Abba, who's the VP of technology
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  Speaker 2: for Saudi a Ramco for Crime out Loud. He was
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  Speaker 2: in Calgary last year and he said, there is an
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  Speaker 2: energy trans sorry, there's a materials transition going on at
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  Speaker 2: the same time as the energy transition. Doesn't get as
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  Speaker 2: much attention, but it's a big deal in the materials world,
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  Speaker 2: and there's a The Alberta Innovates is probably, according to
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  Speaker 2: the last time I interviewed them, a year maybe two
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  Speaker 2: away from having a commercial process to turn bitchumen into
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  Speaker 2: carbon fiber for the automotive industry. Wow, So there are
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  Speaker 2: if there are pivots. And this gets back to our
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  Speaker 2: incumbents dilemma. If your industry is threatened and you need
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  Speaker 2: to pivot, what's your pivot for the oil and gas industry. Well,
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  Speaker 2: in Alberta, it could in large part be pivot from
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  Speaker 2: burning bitchumen to using it to make things to non
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  Speaker 2: combustion uses. Why are we not having that conversation. That's
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  Speaker 2: a much more interesting and profitable conversation for both Alberta
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  Speaker 2: and Ontario.
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  Speaker 1: Well, it sounds to me like that would have a
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  Speaker 1: lot more value add to it as well.
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  Speaker 2: The Alberta innovates it a white paper where they did
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  Speaker 2: the economic modeling. And if you get fifty dollars, assume
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  Speaker 2: that you get fifty dollars for a barrel of bitchmen
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  Speaker 2: if you're sending it to a refinery, If you make
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  Speaker 2: it into a carbon fiber, that same barrel as now
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  Speaker 2: worth two hundred and seventeen dollars.
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  Speaker 1: I'm no math whiz, but I'm pretty sure that two
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  Speaker 1: hundred and seventeen is worth more than fifty.
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  Speaker 2: And you know what there are, John, I don't want
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  Speaker 2: to minimize the technical constraints and the technical difficulties involved
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  Speaker 2: in all of this, the big politics that are involved,
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  Speaker 2: the big policy issues, capital flows. This is a really
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  Speaker 2: complex issue. But if we're going to grapple with it
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  Speaker 2: as a country, could we at least not have the
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  Speaker 2: right conversation. That's what I'm asking for, is we need
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  Speaker 2: to change how we talk about energy so that we
• 15:40
  Speaker 2: can change how we think about energy and what we
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  Speaker 2: do about energy. That's the place to start. We're thanks
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  Speaker 2: to Alberta and the problems like this course, we're having
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  Speaker 2: the wrong conversation.
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  Speaker 1: Fascinating stuff. Markham Hisslop is the publisher and CEO of
• 15:56
  Speaker 1: Energy Media. I always appreciate having some time to chat
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  Speaker 1: with you. It's all always fascinating. Thank you so much
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  Speaker 1: for your time today.
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  Speaker 2: Well, thanks for having me. Let's do it more often.
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  Speaker 1: Absolutely sounds great.