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Climate plan must not stifle oil and gas investment: CAPP

The B.C. head of Canada's oil and gas lobby says the industry supports reducing the emissions that come with getting resources out of the ground—but not if that means sending investment dollars out of the province.
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CAPP's Geoff Morrison: “You can’t get 100 per cent of your reductions from 17 per cent of the problem.”

The B.C. head of Canada's oil and gas lobby says the industry supports reducing the emissions that come with getting resources out of the ground—but not if that means sending investment dollars out of the province.

Geoff Morrison, the Canadian Association of Petroleum Producer's (CAPP) manager for B.C. operations, was invited to give the organization's thoughts on the province’s Climate Leadership Plan at Thursday's Peace River Regional District meeting.

The plan lays out how B.C. will meet its greenhouse gas (GHG) reduction targets, initially set in 2008.  

In November 2015, the government rolled out 32 recommendations aimed at cutting emissions while preserving economic growth. 

Among those recommendations: cutting methane emissions from upstream oil and gas by 40 per cent, and taking new steps to connect drillers to the low-emissions BC Hydro grid. 

“We can contribute to reductions, for the ones we have control over,” Morrison told Alaska Highway News. “But the vast majority of emissions in this province are from other sources.”

Oil and gas production accounts for around 17 per cent of B.C.’s overall emissions, and while that can be reduced, those measures shouldn't discourage investment, Morrison said.

“You can’t get 100 per cent of your reductions from 17 per cent of the problem.” 

Talk of new taxes on emissions at both the federal and provincial level come at a time when the oilpatch is hemmed in on multiple fronts, Morrison said. 

Natural gas exports have fallen 29 per cent since 2007 as Canada’s main customer, the United States, inches closer to becoming a net exporter of gas. 

While production in Canada is up 13 per cent since 2005, U.S. shale gas production jumped 42 per cent in the same period. Morrison noted the Marcellus Shale in the Northeast U.S. produces more natural gas than all of Canada. 

Prices have taken a beating, too. The spot price for natural gas at the AECO sales hub in Alberta, a major indicator, was down 64 per cent over 2014. Meanwhile, upstream investment in B.C. was down 63 per cent, and the number of wells drilled in 2016 is expected to be about half of what it was two years ago.    

Morrison argued that B.C. has the highest price on carbon of the jurisdictions it competes with, saying further increases would be a drain on investment.  

“We’re looking at how we can collectively reduce emissions in difficult economic times,” he said. 

Chief among those is tying upstream oil and gas to the BC Hydro grid, which “remains the foremost opportunity for significant GHG mitigation in B.C.”

One of those projects, BC Hydro’s Dawson Creek and Chetwynd Area Transmission Line, is expected to significantly reduce emissions in the South Peace. Progress Energy, the largest driller in the province, is seeking to plug its Pink Mountain operations into a privately funded transmission line, but the proposal has yet to be approved. 

Petronas, Progress’s downstream subsidiary, denied media reports this week that new federal climate change rules might lead the company to walk on its proposed $11.4 billion Pacific NorthWest LNG plant. 

Upstream methane emissions—a greenhouse gas more potent than carbon dioxide—can be cut through new controls leaks and venting, Morrison said, calling it the second-best option behind electrification.

He added that landfills are the single-largest emitter of methane in B.C.  

Morrison also argued B.C. oil and gas should be protected as an "emissions-intensive, trade-exposed" industry—one where capital can easily flee to another jurisdiction with lenient emissions standards.

The province is accepting comment on the Climate Leadership Plan through March 25. 

 

reporter@dcdn.ca