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VENKATACHALAM & KAPLAN: Oil and gas production is essential to BC’s economy

Here’s another slice of statistical bread to consider: In 2017 the BC oil and gas industry purchased $5.6 billion worth of goods and services from other sectors.

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Guest column by Ven Venkatachalam and Lennie Kaplan of the Canadian Energy Centre

British Columbia has been producing oil and natural gas since 1952. In fact, as of 2018, BC produced 32% of Canada’s natural gas production and 2% of Canada’s conventional daily oil production. British Columbia collects royalties from oil and gas development, supporting the economic prosperity in the province.

Want to know how important the oil and natural gas industry is to the BC economy? Using customized Statistic Canada data from 2017 (the latest year available for this comparison), it turns out oil and gas in BC  generated about $18 billion in outputs, consisting primarily of the value of goods and services produced, as well as a GDP of $9.5 billion.

As for what most of us can relate to — jobs — the BC oil and gas industry was responsible for nearly 26,500 direct jobs and more than 36,100 indirect jobs (62,602 jobs in total) in 2017. Also relevant: The oil and gas sector paid out over $3.1 billion in wages and salaries to BC workers that year.

Here’s another slice of statistical bread to consider: In 2017 the BC oil and gas industry purchased $5.6 billion worth of goods and services from other sectors. That included $600 million from the finance and insurance sector, $770 million in professional services, and $2.8 billion from the manufacturing sector, to name just three examples.

Spending by the oil and gas sector in BC is not the only way to consider the impact of the industry. Given that a large chunk of the oil and gas sector is next door in Alberta, let’s look at what Alberta’s trade relationship with its westerly neighbour does for BC.

BC’s interprovincial trade in total with all provinces in 2017 amounted to $39.4 billion. Alberta was responsible for the largest amount at $15.4 billion, or about 38%, of that trade.

That share of BC’s trade exports is remarkable, given that Alberta’s share of Canada’s population was just 11.5 percent in 2017. Alberta consumers, businesses and governments buy far more from BC in goods and services than its population as a share of Canada would suggest would be the case. Alberta’s capital-intensive, high-wage-paying oil and gas sector is a major reason why.

If Alberta were a country, the province’s $15.4 billion in trade with BC would come in behind only the United States (about $22.3 billion in purchases of goods and services from BC) in 2017. In fact, Alberta’s importance to B.C. exports was ranked far ahead of China ($6.9 billion), Japan ($4.5 billion), and South Korea ($2.9 billion)—the next biggest destinations for BC’s trade exports.

BC has a natural advantage for market access in some respects when compared to the United States. For instance, BC’s coast is near to many Asian-Pacific markets than are U.S. Gulf Coast facilities. The distance between the U.S. Gulf Coast and to the Japanese ports of Himeji and Sodegaura is more than 9,000 nautical miles, compared to less than 4,200 nautical miles between those two Japanese ports and the coast of BC.

The recent demand for natural gas in Asia, especially Japan (the largest importer of LNG) and price increase for natural gas, presents an exciting opportunity for BC oil and gas industry. The IEA predicts that by 2024 , natural gas demand forecast in Asia will be up 7% from 2019’s pre-COVID-19  levels. 

Be it in employment, salaries and wages paid, GDP, or the purchase of goods and services, the impact of oil and natural gas (and Alberta) on BC’s economy and trade flows is significant.

Guest column by Ven Venkatachalam and Lennie Kaplan are with the Canadian Energy Centre

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1 Comment

1 Comment

  1. Left Coast

    December 2, 2021 at 9:59 am

    Those are big numbers . . . wonder why they have “Talked” CNG for almost 15 years and yet not ONE CNG facility has been built in BC? Years ago when they were planning a facility at Squamish gas was $2+ a Gj and almost $12 in Japan. Yet some politicians argued it was not feasible.
    Now they are finally building a facility at Kitimat BC, but will the Pipeline ever get finished to supply the gas? Meanwhile two facilities are planned on the US West Coast, one is southern Washington State and one in Oregon. Be interesting to see which facilities are shipping first.

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Energy

Energy report tells feds to incentivize moves away from oil

The IEA calls for the Canadian government to creating transparent changes to the oil and gas industry but incentivizing technology changes and creating emergency oil stocks.

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A new report says Canada should further invest in clean in electricity and that our country is already among the cleanest energy production in the world.

The International Energy Analysis (IEA) came out with a report outlining recommendations for Canada’s energy future, including balanced decarbonization across the country.

That means higher coordination between federal, provincial and territorial levels to set clear targets for energy efficiency in buildings, transport and industry sectors.

The IEA calls for the Canadian government to create transparent changes to the oil and gas industry but incentivizing technology changes and creating emergency oil stocks.

Canada’s electricity system is one of the cleanest globally according to the IEA report, as 80% of supply is from non-emitting sources such as hydropower and nuclear power.

“Canada’s wealth of clean electricity and its innovative spirit can help drive a secure and affordable transformation of its energy system and help realize its ambitious goals,” said IEA Executive Director Fatih Birol.

“Equally important, Canada’s efforts to reduce emissions — of both carbon dioxide and methane — from its oil and gas production can help ensure its continued place as a reliable supplier of energy to the world.”

The report follows Environmental Minister Steven Guildbeault’s announcement for Canada to be ready to eliminate fossil fuels in 18 months, with zero-emission cars and stricter methane regulations.

Conservative leader Erin O’Toole expressed concern on Twitter with the zero emission plans, calling attention to the need to invest in the oil sector rather than turn away from it.

Energy makes up over 10% of Canada’s GDP, being a major source of capital investment, export revenue and jobs, making the net-zero goals both a challenge and opportunity.

Since the last IEA review in 2015, Canada has made international and domestic commitments dedicated to transforming the energy sector, including a target to cut greenhouse gas emissions by 40‑45% by 2030.

Canada is also a part of the United Nations zero-emission 2050 target that involves over 130 countries worldwide.

Ewa Sudyk is a reporter with the Western Standard.
esudyk@westernstandardonline.com

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Energy

O’Toole mocks Guilbeault’s two-year fossil fuel plan

Full implementation of this ethanol use would create a 60% increase in heating a home, according to the advocacy group Canadians for Affordable Energy.

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The federal cabinet is planning to phase out the use of fossil fuels in the next 18 months, but didn’t mention how much Canadians rely on fossil fuels and what costs this initiative entails.

According to Blacklock’s Reporter, Environment Minister Steven Guilbeault said in the next two years Canadians should also see more stringent methane regulations and zero-emission vehicle standards.

Conservative leader Erin O’Toole was opposed to the proposition, and highlighted the need for using Canada’s fossil fuel industry and supporting those who work in it.

“Canada is a cold country. We need fossil fuels, natural gas, to heat our homes,” said O’Toole in a video standing in front of a freezing cold House of Commons.

O’Toole tweet

“Someone so disconnected from reality that he’s making policy that will hurt our country. Division and absolute disconnect from reality.”

Guilbeault stressed the need for faster action on environmental initiatives by the Liberal government.

“I mean, maybe 2024, but that’s the type of time frame we have to work with and it’s going to be tough because on the one hand, some people are going to criticize us for not giving them enough time to be consulted, but the state of climate change is such that we need to learn to do things faster and that’s certainly true of us as a government,” he said.

Guilbeault acknowledged many of his proposed environmental actions will cause significant costs to consumers, but stated the luxury of waiting to make environmental changes is something Canadians don’t have any more.

The Clean Fuel Standard, implemented in 2021, mandated higher use of renewable energy in everyday consumption which includes tripling expensive ethanol content in gasoline and increasing carbon taxes.

Full implementation of the ethanol use would create a 60% increase in heating a home, according to the advocacy group Canadians for Affordable Energy.

Guilbeault complained about regulators taking too long to finalize the Clean Fuel Standard, as the regulation took five years to finalize and implement.

“One of the things I told stakeholders when I was in Toronto recently and then in Calgary, one of the things I told the department as well is we don’t have that luxury anymore,” said Guilbeault.

“We don’t have five years to consult every time we want to introduce a new measure.”

Canada’s two major parties are opposing on the matter.

O’Toole ended his statements on Twitter saying the Conservative party will keep fighting to keep Canadians warm and fossil fuel jobs safe.

Ewa Sudyk is a reporter with the Western Standard
esudyk@westernstandardonline.com

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Energy

Energy report says fossil fuel usage set to plunge in Canada

The news was met with glee from Canada’s Environment Minister Steven Guilbeault.

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The use of fossils fuels in Canada is set to drop drastically in the next three decades, says a new report.

The Canada Energy Regulator predicts fossil fuel use will fall by 62% by 2025.

The forecast predicts Canadians will use significantly less gasoline and diesel over coming years, resulting in a 43% decline in the use of refined petroleum products by 2050.

Electricity use could rise by as much 45% as people change over to electric vehicles.

The report predicts wind and solar power will be used to help meet the rise in demand.

The news was met with glee from Canada’s Environment Minister Steven Guilbeault.

“Some welcome news from The Canada Energy Regulator: fossil fuel use will fall by 62% in Canada by 2050. We’re making progress, the work continues!” he tweeted.

The forecast calls for Canadian crude oil production to peak at 5.8 million barrels per day in 2032, and then to decline to reach 4.8 million barrels per day in 2050.

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