Securing new markets for its significant energy resources is an issue of “national importance” to Canada, Enbridge president and CEO Al Monaco told a global energy roundtable Tuesday in London.
During a morning address to the Canada Europe Energy Summit at London’s Canada House, Monaco told his audience of more than 100 industry leaders, government representatives, and prominent investors that delivering Canadian crude oil to a rapidly changing global energy market, and achieving fair market value for those resources, is an “imperative” for Canada.
“Industry’s imperative, and Canada’s, is clear. We need to access new markets so that we can achieve fair value for our resources,” Monaco said in a speech. “One thing is certain: Canada has a unique opportunity to emerge as a major energy force of vital importance to growing global markets.”
Complicating the picture and intensifying the challenge, noted Monaco, are numerous factors, including: the furious pace of North American supply growth; the change in global energy demand, which will be driven by emerging markets, rather than North America or Europe; delivery bottlenecks that have created severe price dislocations; and greater scrutiny of infrastructure development from the public and regulators.
“Even with these challenges, we are making progress and the tide is turning,” said Monaco. “There’s vigorous public debate around energy development, and I believe that’s positive, because it focuses the energy industry on addressing stakeholders’ concerns over safety and the environment.
“Today, we’re starting to see a more balanced discussion about developing energy resources – and creating access to the right markets within North America and globally.”
North America’s crude supply growth is forecast to rise by seven million barrels per day by 2025, partially due to the rapid rise of shale-based light oil production. Combined with Canadian oilsands growth, that means the continent could be energy self-sufficient – or “energy secure” – as early as 2020.
In the big picture, that means wholesale changes to North America’s energy transportation grid are critically necessary. It means getting Canadian crude to emerging global markets such as China and India, which are expanding their refinery capacity for heavy oil. It also means delivering heavy and light oil to the right refining markets in North America, to supply them with the feedstock they need.
Removing the transportation bottleneck with sufficient infrastructure would reduce the disparity between global and continental prices, said Monaco.
“Canada is leaving billions of dollars on the table today by not achieving fair value for our natural resources,” he said. “Now, at Enbridge, we haven’t just been sitting around watching this happen – as a company, we recognized these issues early on.”
Enbridge already operates the world’s longest and most complex crude oil pipeline system, delivering 2.3 million barrels a day to Canada and the U.S. – and is rapidly moving to access new markets for Canadian crude both continentally and globally, thanks to $36-billion in growth projects being rolled out over the next five years, with most of that capital commercially secured.
Enbridge is aiming to open up 1.7 million barrels a day in new North American markets. That includes connecting Canadian oilsands product to heavy refineries in the Houston area through its Gulf Coast Access program, as well as connecting light supply from the Bakken and Western Canada to premium markets in the U.S. Midwest, Ontario, and Quebec through its Eastern Access and Light Oil Market Access initiatives.
These strategies also include ensuring sufficient regional capacity in the Canadian oilsands where Enbridge, as the region’s leading pipeline operator, has just announced $3-billion in projects connecting an 11th oil sands project, Suncor’s Fort Hills, to its infrastructure.
And they also include critically important plans to access tidewater, with the proposed Northern Gateway project aiming to open access to those Asian markets.
“Where volumes used to flow from coastal to inland markets, the game today is to get inland production to the coast,” said Monaco. “And the strategic positioning of (Enbridge’s) systems means that we are well situated to expand, extend, reverse, and repurpose infrastructure to facilitate reconfiguration of the grid.”
As for sustainable energy development, Enbridge has made significant investments in innovation and technology to further enhance its No. 1 priority of safety and operational excellence – focusing on areas such as pipeline design and construction, inspection, and leak detection and control systems.
“I believe that energy leadership and environmental leadership are two sides of the same coin,” said Monaco. “There’s now broader acknowledgement of the benefits of market access and the need for infrastructure. And our industry is also making great strides in furthering our commitment to safe and responsible development.”
Tuesday’s Canada Europe Energy Summit gathered leaders from the Canadian energy industry, as well as prominent European-based investors, innovators, and thought leaders to explore the commercial opportunities presented by Canada’s emergence as an energy superpower.
The event is presented annually by The Energy Roundtable (www.energyroundtable.org), an industry-led forum founded in 2004 that helps define Canada’s place in global energy markets.