OILSANDS PRODUCERS FORCED TO TRANSITION AS BATTERIES GAIN MOMENTUM
Canada’s oilsands industry is in a race with other forms of crude production and emerging technologies such as electric cars to remain a relevant energy source in the coming decades, according to consultancy Deloitte LLP.
OILSANDS PRODUCERS FACE THE RISK OF A “FORCED TRANSITION”
Among various scenarios, oilsands producers face the risk of a “forced transition” away from oil and natural gas as power generation is dominated by solar panels and wind turbines and as electricity replaces oil as a transportation fuel, Deloitte said in a report released Tuesday. Most of Canada’s oil and gas would be stranded and only the lowest-cost producers would survive by spending on innovative technology.
“Companies should reflect on what actions they might take today to provide resilience in the face of different future scenarios,” Andrew Swart, Daniel Rowe and Paul Craig wrote in the report.
Companies including Suncor Energy Inc., Imperial Oil Ltd. and competitors have been slashing operating costs as they wait for crude prices to rise in order to deploy the latest, cost-saving equipment that will make oil production less carbon intensive. Canada’s industry is hampered by its higher costs and lack of access to global markets, which has depressed prices for commodities.
Another possible scenario would see hydrocarbons remain a significant source of global energy as commodity prices remain competitive and with only incremental improvements in battery technology, the report said. Foreign investment in Canadian oil and gas, as well as new pipelines, would allow companies to remain competitive in global markets.
NO MATTER WHAT, COMPANIES MUST FOCUS ON INNOVATION TO IMPROVE PERFORMANCE AND ENGAGE WITH STAKEHOLDERS TO RETAIN THEIR SOCIAL LICENSE TO OPERATE, THE AUTHORS SAID.
Canada’s oil industry is on track to post a combined pre-tax losses of US$10 billion this year, following a record loss of US$11 billion in 2015, according to the Conference Board of Canada. The industry will likely return to profit next year, the group said in its industry outlook.
Source: Financial Post
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