Attendees at the Global Energy Show explore the Calgary Trade Fair on June 7th. Jeff McIntosh / The Canadian Press
Cenovus Energy Inc’s CVE-T chief Alex Pourbaix is sure to expect oil to not reach $ 200 a barrel.
He believes that the fact that current prices are around $ 120 a barrel is bad enough for Canada’s energy sector. And if that comes close to $ 150, he says there is a very good chance of a steady decline in demand.
Oil prices have been at record highs for months, driven by a combination of rising demand as countries cut back on pandemic restrictions and the Russian invasion of Ukraine, which has reduced production of a important world actor. Prices rose again this week, when the EU agreed to ban Russian oil. Markets are also worried that a supply crisis will only get worse as China, a major oil importer, loosens its own anti-virus measures.
Cenovus will restart the West White Rose offshore oil project in Newfoundland
Mr. Pourbaix made his remarks at the Calgary Global Energy Show on Tuesday, the day after Goldman Sachs raised its price forecast for Brent oil (a global benchmark) by $ 10 to $ 135 a barrel during the first half. next year. .
The challenge with oil and gas is that there is no switch that immediately adds five or six million barrels to fill a supply gap to help reduce prices.
“It takes tens or hundreds of billions of dollars to make these investments, so I’m a little worried because it will take the industry a while to respond to that,” Mr. Pourbaix.
The Organization of the Petroleum Exporting Countries and its allies, known as OPEC +, agreed on Thursday to increase production by 648,000 barrels per day (bpd) in July and August instead of 432,000 bpd as previously agreed. But that did little to bring down prices.
“Experts tell me that as oil approaches $ 150 a barrel, you’re going to start to see some destruction of demand,” Mr. Pourbaix.
“I think that usually comes across as people who take fewer vacations, people who drive less and take that kind of personal choice.”
And, although Mr. Pourbaix easily admits that he does not know what levels of consumption will be over the next 50 years, he believes that the decarbonisation targets of the Canadian oil sector put him in a good position to supply the market as the world demands cleaner energy.
“What has happened in recent years is that there has been a lot of ambition to be able to move this transition forward very quickly. I think we are discovering that this is a transition of many decades and will probably look more like diversification than transition. “.
Canada’s largest oil sands producers have set a goal of zeroing their greenhouse gas emissions by 2050. The first step is a planned pipeline system to transport carbon captured during production. oil in storage near Cold Lake, northern Alberta.
For the next 30 years, Mr. Pourbaix also hopes to see a combination of longer life wells, a more intense focus on capturing fugitive methane emissions, and implementing carbon capture at large oil sands sites.
Then there are small modular nuclear reactors.
“If we are able to market small modular reactors, you can see a scenario where you could completely decarbonize the river upstream in Alberta,” he said.
And while he believes there is still work to be done with Ottawa in the regulatory field to make the system more predictable, he said cooperation on files such as the tax credit for carbon capture has been positive for the industry.
He is also optimistic about the availability of pipelines, especially now that Enbridge Line 3 is online.
Combined with the expected completion of the controversial Trans Mountain pipeline expansion, which the federal government bought in 2018, “we probably have at least a decade where pipelines won’t be the problem they’ve been in the past.”
“For much of the last 15 years, our industry has been really challenged by the exit of the province due to the failure to carry the pipeline,” he said, but “this has improved significantly.”
With a Reuters report
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