- The Canadian energy sector is a good place for resource investment because of the country’s bountiful resources, proximity to East Asia and environmental standards.
- Canada possesses strengths and opportunities related to energy innovation, specifically in carbon capture sequestration, future hydrogen production, and the electrification of resource production.
- Canada must pay close attention to how other countries are attracting foreign resource investments in order to remain as competitive as possible.
Foreign investors should recognize Canada as a fantastic opportunity full of natural resources, particularly in the energy sector. Canadian stakeholders, from governments to First Nations, can come together to put forward major energy projects while meeting the needs of investors. Through communication and dialogue, Canadian stakeholders in the energy sector can attract more foreign investment to help grow the economy.
The LNG Canada project is the largest private sector investment in Canada’s history. What do you identify as the investment story’s main takeaways and learnings?
Let me first address that from the perspective of a Canadian. I think this project is fantastic news for Canada in that we have been able to secure a very large investment from five major multinational organizations that recognized that Canada is a safe place for them to put their investment dollars. They have shown that Canada possesses energy resources that these companies are developing economically in order to export them to markets that need that energy the most. Canadians are also seeing that this investment is helping us deliver opportunities for Canada’s First Nations at an unprecedented level. Ultimately, we are seeing that this is an energy project that is putting Canada on the map as a country that is able to export its resources to the countries that need it the most. From that perspective as a Canadian, it is pretty powerful.
“We are seeing that this is an energy project that is putting Canada on the map as a country that is able to export its resources to the countries that need it the most. From that perspective as a Canadian, it is pretty powerful.”
From the perspective of major global energy investors, Canada provides countries and companies with the opportunity to diversify their energy supply, instead of having to rely on a single country. Canada has an abundant supply of natural gas, so it can help foreign investors become more energy secure. Canada’s location also has an additional benefit for investors as we are well positioned to supply our resources to East Asia, which provides the sector with many market opportunities. For example, Canada represents a shorter sailing time to Asia and Southeast Asia. From our west coast, it takes about 10 to 12 days to reach those key markets, whereas from the US Gulf Coast ships have to go through the Panama Canal to get to this part of the world and this prolongs that journey by about 10 days. So, Canada really does offer distance-to-market opportunities. Looking at both these advantages in tandem, Canada’s abundant energy resources and proximity to key markets, which together offer advantages in terms of energy security, are very attractive for international investors.
Canada offers further opportunity from investors’ point of view as it is a stable environment to invest in. Canadian regulations on how energy must be produced are world leading. Our sector is also world leading in terms of how resource companies have taken on opportunities to build Indigenous businesses and work with Indigenous communities. It does not mean that it is perfect but I do believe it is world leading. These are facets of investing in Canada that must be recognized by investors who are looking for sustainable, environmentally conscious investments that generate social value – Canada also offers quite a lot there, too.
“Canada’s abundant energy resources and proximity to key markets, which together offer advantages in terms of energy security, are very attractive for international investors.”
Furthermore, the price of natural gas in Canada is quite competitive, which is a huge advantage for us. LNG Canada’s investors and others are looking to monetize Canada’s more than 200 years worth of gas supply. These investors see an opportunity in getting that gas to market, while displacing coal and keeping the air clean.
To remain and improve our competitiveness, Canada must also be mindful of what other regimes are doing, and how other countries are attracting investments. Energy is a competitive industry, so project proponents must make sure that they are on top of their game in terms of international competitiveness. We need to keep pace if we want investments to come to our jurisdiction.
“These are facets of investing in Canada that must be recognized by investors who are looking for sustainable, environmentally conscious investments that generate social value – Canada also offers quite a lot there, too.”
One example of this and a learning that came out of the LNG Canada project is the Canadian federal and BC’s provincial governments use of a substitute permitting process. For this project, both levels of government came together to align how to address each of the governments’ and regulatory authorities permitting requirements. This does not mean the process was less comprehensive, it just means that it was more efficient. So I think we can take lessons and learnings from that process and how we can apply that in other areas or industry to make sure that our regulatory process is as efficient and comprehensive as possible, and meets the expectations of both regulators and society.
How would you characterize innovation in Canada’s energy sector today? Where do we have opportunities to seize, and what are our biggest challenges?
Innovation is something that companies are constantly looking at. How do we innovate? How do we streamline? How do we make our process more efficient? Opportunities grow when we collectively address the barriers facing the energy sector, like reducing emissions, for example. All key stakeholders need to work together to address the global and Canadian energy industry’s challenges to maintain a robust energy sector that will continue to innovate, provide revenue, create jobs and accelerate investment in technology. The energy sector’s biggest challenge is how to get products to market, but we are seeing movement on this front.
“Canada is currently leading the way in carbon capture sequestration (CCS), or carbon capture and storage. We also have unique opportunities with blue hydrogen, which is produced from natural gas.”
Canada is currently leading the way in carbon capture sequestration (CCS), or carbon capture and storage. We also have unique opportunities with blue hydrogen, which is produced from natural gas.Another way we are leading is through electrification in regions such as British Columbia, where access to electricity can be very cost effective. So we are seeing more innovations and potential for new ones.
However, the decision to invest in new technologies is very costly, and that represents a huge challenge. It is difficult to generate revenue, invest in technology and innovate as quickly as regulators, society or politicians might expect. Technology adoption cannot be driven by the energy sector alone. It needs to be done holistically, with support from both government and business.Still, I am optimistic about Canada’s energy sector. We need to realize our potential by working closely with stakeholders and governments to make these projects happen.
What assurances do investors need from the government and other stakeholders in order to move forward on a project?
From an external investor’s perspective, you want to see efficiency in the regulatory process and information sharing between governments. Federal and provincial governments must work together and share information so that investors can complete their environmental assessment in concert with them.
“From an external investor’s perspective, you want to see efficiency in the regulatory process and information sharing between governments.”
The Canadian government should give investors certainty that they will work together with different stakeholders for a positive outcome. Investors will choose where to invest based on whether they have certainty that their investments will be realized in time, under certain conditions, and with governments that are open and supportive of the necessary investments. Otherwise they will invest elsewhere.
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Does the Canadian talent force in the energy sector adequately meet investors’ needs?
Yes, Canada has labour and we have talent. And we also see a good mobility of talent between various projects around the country. We operate in British Columbia and we try to maximize the labour force from the local regions. However, once that labour is exhausted, you have to pull workers from other jurisdictions in Canada. If there is a down cycle in one province, it can provide workers to another province. This helps because the labour supply is not being squeezed.
“Canada has labour and we have talent. And we also see a good mobility of talent between various projects around the country.”
To increase our competitiveness Canada should consider investing more in energy education to make sure workers have the training they need. This would give investors certainty that the talent is available, so they will not need to scramble for the right tradespeople, which would drive up project costs.
How can energy companies get stakeholders to work together to create stronger investment opportunities? How do you view investment into Canada’s energy sector going forward?
Our project at LNG Canada was comprehensive and efficient, and there are many lessons that can be learned from it. We developed a compelling investment proposition that passed many competitive hurdles compared to the rest of the world. LNG Canada had overwhelming support from communities, First Nations and governments, which was borne out of an ongoing process of dialogue and feedback. In taking this approach, we were able to present our external partners with an opportunity to develop a major energy project that addresses societal concerns related to the development of energy.
“LNG Canada had overwhelming support from communities, First Nations and governments, which was borne out of an ongoing process of dialogue and feedback.”
So the quality of our consultation helps build relationships and partnerships with communities and First Nations, which is also something that was very compelling to our investors when they had to make this decision.
To achieve that buy-in, major projects like ours have to engage early on with stakeholders to make sure that all of their concerns are being addressed. There is no way of circumventing this. Additionally, if investors engage with external stakeholders on the frontend by bring in their concerns and addressing them early before designing their project, they will move forward more efficiently on the backend.
“The quality of our consultation helps build relationships and partnerships with communities and First Nations, which is also something that was very compelling to our investors when they had to make this decision.”
Large projects like ours also have to be resilient. Investors have to keep the mindset that they will stay on top of the issues and risks, and use a solutions-oriented manner when met with new information. These projects are incredibly complex, so investors must listen to all stakeholders to ensure that they are satisfying their market needs.
“To achieve that buy-in, major projects like ours have to engage early on with stakeholders to make sure that all of their concerns are being addressed.”
In terms of how resource investment in Canada will evolve, I am optimistic because I believe in the innovation taking place here, I believe in the nature of Canadians, I believe that we have learned, I believe that we are optimists and that we will find ways of realizing our potential and working with stakeholders to make projects happen. I also get a lot of optimism when I speak with many of the communities and Indigenous groups that I get to work with on the LNG Canada project. Seeing how they are growing based on the opportunities that projects are creating for their communities gives me great inspiration, and I think we will see many more projects go forward. I am an optimist. I think we have some current challenges, but I do think that when we come together we can get great things done.