Transcript: Beyond Peak Oil | Sep 27, 2017

Steve sits in the studio. He's slim, clean-shaven, in his fifties, with short curly brown hair. He's wearing a gray suit, white shirt, and striped red and pink tie.

A caption on screen reads "Beyond peak oil. @spaikin, @theagenda."

Steve says OIL PRICES HIT A
TWO-YEAR HIGH THIS WEEK, BUT
AFTER THE PROTRACTED PRICE SLUMP
FOLLOWING THE GREAT RECESSION,
SOME ARE STILL QUESTIONING THE
FUTURE FOR THAT COMMODITY, AND
HOW IT COULD AFFECT CANADIANS
FROM COAST TO COAST TO COAST.
ELENA CHERNEY IS GLOBAL ENERGY
EDITOR AT THE WALL STREET
JOURNAL, AND SHE JOINS US NOW TO
DISCUSS PREPARING FOR A
POST-"PEAK OIL" WORLD.

Elena is in her late thirties, with long straight auburn hair. She's wearing and off-white jacket and a blue stone necklace.

Steve continues NICE TO HAVE YOU BACK HERE.

Elena says THANK YOU.

Steve says LET'S DO A COUPLE OF
DEFINITIONS WHEN WE START HERE.
I MENTIONED PEAK OIL ON THE TOP.
THERE'S PEAK DEMAND AND PEAK
OIL.
TELL US WHAT BOTH ARE AND WHAT'S
THE DIFF.

The caption changes to "Elena Cherney. The Wall Street Journal."
Then, it changes again to "Planning for the future."

Elena says A FEW YEARS
AGO A LOT OF ECONOMISTS AND OIL
ANALYSTS WERE TALKING ABOUT PEAK
OIL.
THAT WAS WHEN OIL WAS HITTING
ITS HIGH PRICES AND SPIKING AND
THERE WAS CONCERN THAT THERE
WOULD NOT ACTUALLY BE ENOUGH OIL
ON THE PLANET THAT WOULD BE
RECOVERABLE TO PROVIDE FOR
FUTURE DEMAND, OKAY?
SO THAT WAS THE TERM, "PEAK
OIL," REFERRED TO THE IDEA THAT
THERE JUST ISN'T ENOUGH AND
THAT'S WHY THE PRICES WERE
SPIKING.
NOW WE'VE SEEN A REAL REVERSAL
AND THE CONVERSATION CENTRES
MUCH MORE AROUND CONCERNS AROUND
SO-CALLED PEAK DEMAND, AND
THAT'S THE IDEA THAT IS GAINING
MOMENTUM AMONG NOT JUST ANALYSTS
AND ECONOMISTS BUT AMONG
EXECUTIVES AT SOME OF THE
WORLD'S BIGGEST ENERGY
COMPANIES, THAT IN FACT GLOBAL
DEMAND FOR OIL IS LIKELY TO
PEAK, GROWTH IS LIKELY TO PEAK,
AND THEN EVENTUALLY START TO
DECLINE, AND THAT COULD HAPPEN
AS SOON AS, ANYWHERE BETWEEN,
ESTIMATES RANGE FROM 2025 TO
MORE LIKELY IN THE 2040s.

Steve says SO THIS NEXT
QUESTION THEN BECOMES QUITE
IMPORTANT TO CORPORATE
EXECUTIVES, WHICH IS, I GUESS,
OIL'S ABOUT 60 BUCKS A BARREL
RIGHT NOW.
HOW CONFIDENT ARE THEY THAT IT'S
GOING TO STAY THERE FOR A GOOD
LONG PERIOD OF TIME SO THAT
THEIR INVESTMENTS WILL PAY OFF?

Elena says OKAY.
SO THAT'S A REALLY INTERESTING
QUESTION AND IT'S NOT... IT'S
HARD TO SAY THAT IT'S GOING TO
REMAIN THERE WITHOUT GOING UP
FIRST OR DOWN.
SO WE COULD SEE... A LOT OF
PEOPLE ARE TALKING ABOUT
SOMETHING CALLED THE LAST SPIKE,
AND THE IDEA MAY BE THAT BECAUSE
OIL HAS BEEN SO LOW FOR SO LONG
NOW, FOR A FEW YEARS, THERE'S
BEEN UNDERINVESTMENT IN THE
INDUSTRY, SO THAT MEANS
PRODUCTION MAY NOT, IN THE
IMMEDIATE FUTURE, IN THE SORT OF
SHORT- TO MEDIUM-TERM, KEEP UP
WITH DEMAND.
YOU COULD ACTUALLY SEE ANOTHER
MOMENT OF PRICES GOING UP AGAIN.

Steve says SPIKING A BIT.

Elena says SPIKING A BIT.
WHICH FOR CANADA COULD BE A GOOD
THING IN THE SHORT TERM,
DEPENDING ON WHERE YOU SIT ON
THESE ISSUES, WHICH WE'LL GET
TO, I GUESS.
BUT IN THE LONGER TERM, MANY
COMPANIES ARE PREPARING FOR A
FUTURE IN WHICH CRUDE OIL PRICES
REMAIN CLOSER TO 60 AND THAT 80
OR 100 OR 120 ISN'T REALLY A
REALISTIC LONG-TERM PRICE FOR
OIL.

Steve says THEY COULD STILL
MAKE A BUCK AT 60.

Elena says THEY COULD
STILL MAKE A BUCK.
IT'S NOT THAT THE NEED FOR OIL
IS GOING TO DISAPPEAR, IT'S JUST
THAT DEMAND FOR OIL IS NOT GOING
TO GROW AS FAST AS IT HAS
HISTORICALLY.

Steve says OKAY.
LET'S PLAY SOME TAPE HERE.
HERE'S THE PRIME MINISTER
SPEAKING IN HOUSTON, TEXAS,
MARCH OF THIS YEAR, ABOUT THESE
ISSUES AND MORE.
ROLL IT, SHELDON.

A clip plays on screen with the caption "March 9, 2007."
In the clip, Prime Minister Trudeau gives a speech.

He says AS
I SAID ON THE VERY FIRST TRIP TO
THE OIL PATCH BACK IN 2012, NO
COUNTRY WOULD FIND 173 BILLION
BARRELS OF OIL IN THE GROUND AND
JUST LEAVE THEM THERE.

[APPLAUSE]

He continues THE RESOURCE WILL BE DEVELOPED.
OUR JOB IS TO ENSURE THAT THIS
IS DONE RESPONSIBLY, SAFELY, AND SUSTAINABLY.

The clip ends.

The caption changes to "Elena Cherney, @ElenaCherney."
Then, it changes again to "A changing political response."

Steve says WE HEARD FROM CHRIS
TURNER EARLIER IN THE PROGRAM
WHO JUST HAS THIS NEW BOOK OUT
CALLED "THE PATCH" ABOUT THE
OILSANDS, AND ONE OF THE KEY
POINTS HE MAKES IS THIS IS NOT A
BLACK-AND-WHITE ISSUE, THERE IS
SO MUCH NUANCE AROUND THIS ISSUE
AND BOTH SIDES DON'T WANT TO
ACKNOWLEDGE, BUT IT IS THERE.
DOES THAT FEEL LIKE TO YOU THE
APPROACH THE TRUDEAU GOVERNMENT
IS DOING, A MORE NUANCED
APPROACH, AND IS THAT REFLECTED?

The caption changes to "Connect with us: @theagenda, TVO.org, Facebook, YouTube, Periscope, Instagram."

Elena says I THINK I
AGREE WITH CHRIS.
I HEARD THAT SPEECH WHEN HE MADE
IT.
I REMEMBER THINKING, YOU KNOW,
IT'S REALLY INTERESTING TO HEAR
A POLITICAL LEADER ARTICULATE
THAT KIND OF NUANCE.
NUANCE OFTEN GETS LOST IN THE
CONVERSATION.
BUT I THINK WHAT THE PRIME
MINISTER SEEMS TO BE TRYING TO
ARTICULATE IS IN FACT, WE KNOW
THAT THE INDUSTRY IS CHANGING,
WE KNOW THAT THE WAY THE WORLD
CONSUMES ENERGY IS CHANGING.
THAT'S THE REALITY.
THE CHIEFS OF ALL THE BIG ENERGY
COMPANIES KNOW THAT AND ARE
ADJUSTING ACCORDINGLY IN TERMS
OF HOW THEY INVEST, WHERE THEY
PUT THEIR BETS FOR THE FUTURE,
AND I THINK WHAT WE'RE HEARING
IS THE TRUDEAU GOVERNMENT SAYING
THAT CANADA NEEDS TO DO THE SAME
THING.
CANADA NEEDS TO BE PREPARED FOR
A FUTURE IN WHICH CRUDE OIL
ISN'T THE SAME INDUSTRY AS IT
HAS BEEN HISTORICALLY.
BUT THAT CHANGE ISN'T
HAPPENING... IT'S NOT LIKE
TURNING OFF A SWITCH.
IT'S NOT HAPPENING OVERNIGHT,
AND IT WOULD BE ALMOST
PRETENDING, YOU KNOW, THAT IT IS
CHANGING OVERNIGHT, DOESN'T MAKE
A LOT OF SENSE IF YOU HAVE
BILLIONS OF BARRELS IN THE
GROUND YOURSELF.

Steve says THAT'S OILSANDS
POLICY.
WHAT ABOUT ON PIPELINES?
SAY TYPE OF NUANCED APPROACH?

Elena says I THINK THE
PIPELINE POLICY FLOWS FROM THIS
RECOGNITION...

Steve says NO PUN INTENDED.

Elena chuckles and says OF COURSE NOT.
NO PUN INTENDED.
THE PRESENT POLICY FLOWS FROM
THE IDEA THAT DEMAND FOR OIL IS
CHANGING, BUT IT ISN'T CHANGING
SO FAST THAT YOU WANT TO JUST
KIND OF GIVE UP ON THE WHOLE
THING.
IT'S A PRETTY PRAGMATIC
APPROACH.
I THINK WE SAW THAT WHEN THE
PRIME MINISTER ARTICULATED...
YOU KNOW, IT WAS SIGNIFICANT
THAT HE HIMSELF STOOD UP AND WAS
THE ONE TO DELIVER THE POLICY ON
TRANS MOUNTAIN AND LINE 3, FOR
EXAMPLE, THAT THESE PIPELINES
WOULD GO AHEAD IN ORDER TO BE
ABLE TO EXPORT, ESSENTIALLY, THE
OIL THAT CANADA IS PRODUCING.
THEN KEYSTONE GOT APPROVED.
THAT WAS A BIT OF PERHAPS A
SURPRISE, A DEVELOPMENT THAT
WASN'T ANTICIPATED COMPLETELY.
SO THERE MAY BE MORE EXPORT
CAPACITY NOW THAN WAS
ANTICIPATED WHEN THE GOVERNMENT
APPROVED THE OTHER TWO PIPELINES.

Steve says LET'S DO A LITTLE
PRIMER HERE ON ENERGY EAST,
WHICH OF COURSE POTENTIALLY
COULD AFFECT THIS PROVINCE.
A REMINDER, SHELDON, LET'S BRING
IT UP, REMIND EVERYBODY WHAT IT IS...

A slate appears on screen, with the title "Energy East 101."

Steve reads data from the slate and says
A PROPOSED 4500 KILOMETRE
PIPELINE STRETCHING FROM ALBERTA
TO AN EXPORT TERMINAL IN NEW
BRUNSWICK, IT WOULD RUN THROUGH
SASKATCHEWAN, MANITOBA, ONTARIO,
AND QUEBEC ON THE WAY AND CARRY
UP TO 1.1 MILLION BARRELS OF
CRUDE OIL EVERY DAY.
WHERE'S THIS AT AT THE MOMENT, ELENA?

The caption changes to "Energy East."

Elena says WHERE THIS
IS AT IS IT IS STALLED, IT IS A
QUESTION MARK.
AND IT IS A QUESTION MARK
BECAUSE THE APPROVAL PROCESS BY
THE NEB, THE NATIONAL ENERGY
BOARD, HAS SHIFTED.
IN AUGUST, THE BOARD ANNOUNCED
THAT IT WAS GOING TO BROADEN THE
SCOPE OF ITS ASSESSMENT TO
APPROVE THE PIPELINE TO INCLUDE
LOOKING AT SOMETHING THAT IT HAS
NOT PREVIOUSLY LOOKED AT IN
APPROVAL OR NOT A... IN
APPROVING OR NOT APPROVING
PIPELINES, AND THAT'S THE
POTENTIAL EFFECT OF CANADIAN
CLIMATE CHANGE POLICY AND GHG
POLICY ON DEMAND FOR CRUDE OIL.

Steve says THOSE ARE QUITE THE
DIFFERENT TERMS OF REFERENCE.

Elena says WHAT IT DOES
IS THE NEB IS TAKING ON WHAT IS
A VERY LEGITIMATE GLOBAL
QUESTION: HOW WILL POLICY AROUND
THE WORLD AFFECT THE WAY THAT
COUNTRIES AND PEOPLE CONSUME OIL
AND SAYING, YOU KNOW, WE NEED TO
THINK ABOUT THAT QUESTION IN
DECIDING WHETHER OR NOT TO GO
AHEAD AND BUILD THIS PIPELINE.

Steve says BUT THAT WAS NEVER
PART OF THEIR PAST CONSIDERATION?

Elena says IT WAS NOT
PART OF THE PAST CONSIDERATION.

Steve says SO WHAT'S DIFFERENT?

Elena says I THINK
THAT'S PROBABLY NOT YET WELL EXPLAINED.
I KEEP GOING BACK TO WHAT THE
PRIME MINISTER SAID, IT'S HARD
NOT TO ASSUME THAT THE NEB'S
MOVE HERE, TO BROADEN ITS SCOPE
AND TAKE ARGUABLY A MORE
POLITICAL AND MORE IDEOLOGICAL
PERSPECTIVE ON THE APPROVAL
PROCESS, ISN'T A REFLECTION OF
THE TRUDEAU GOVERNMENT'S MOVE TO
PUT ENVIRONMENT AT THE CENTRE OF
ITS ENERGY POLICY.

Steve says WE DON'T WANT TO BE
NAIVE ABOUT THESE THINGS, BUT
THE NATIONAL ENERGY BOARD IS
SUPPOSED TO BE AN INDEPENDENTLY
OPERATING BODY BUT OF COURSE IT
DOESN'T OPERATE IN A VACUUM,
POLITICS ARE AT PLAY.
DO WE PRESUME AT SOME POINT THE
PRIME MINISTER, OR SOMEBODY IN
HIS OFFICE, OR THE ENVIRONMENT
MINISTER OR THE NATURAL
RESOURCES MINISTER WENT TO
SOMEBODY AT THE NEB AND SAID,
NEW MARCHING ORDERS?

Elena says I WOULDN'T
PRESUME THAT BUT I THINK IT IS
INTERESTING TO NOTE THAT THIS
CHANGE HAS HAPPENED ON THE WATCH
OF THIS GOVERNMENT, NOT THE
PREVIOUS GOVERNMENT.
IT ALSO COMES AFTER REVELATIONS
THAT I BELIEVE PREVIOUS
COMMISSIONERS AT THE NEB HAD
BEEN IN CONTACT WITH PEOPLE WHO
WERE WORKING FOR TRANSCANADA IN
QUEBEC, THAT WAS AN ISSUE, AND
THE NEB ALSO WAS FACING... THE
GOVERNMENT HAS SIGNALLED IT'S IN
THE PROCESS OF OVERHAULING THE
ENTIRE WAY THAT PIPELINES ARE
APPROVED.
SO THERE'S SOME PRESSURE ON THE
NEB RIGHT NOW, I THINK IT'S FAIR TO SAY.

Steve says DO WE PRESUME THAT
THE INDUSTRY IS NOT THAT HAPPY
ABOUT THESE NEW MARCHING ORDERS?

Elena says THE INDUSTRY
OR PARTS OF THE INDUSTRY HAVE
SIGNALED THAT THEY'RE NOT THAT
HAPPY.
BECAUSE THIS REALLY DOES CHANGE
THE GAME.
I MEAN, IF THIS KIND OF ANALYSIS
BECOMES PAR FOR THE COURSE FOR
PROJECTS FOR ENERGY-RELATED
PROJECTS, INFRASTRUCTURE
PROJECTS IN CANADA, THAT WILL
POTENTIALLY REALLY CHANGE THE
WAY IN WHICH THE INDUSTRY
DEVELOPS OR DOESN'T DEVELOP.

Steve says OR DOESN'T, RIGHT.

Elena says AND THERE
ARE ALREADY A NUMBER OF
CHALLENGES FACING THE INDUSTRY
AND FUTURE DEVELOPMENT AND
INVESTMENT IN CANADA.

Steve says IN OUR REMAINING
MOMENTS HERE, LET ME GET YOU TO
COMMENT ON THIS.
JEFF RUBIN DID A REPORT FOR
CIGI, CALLED "EVALUATING THE
NEED FOR PIPELINES," AND HERE'S
AN EXCERPT...

A quote appears on screen, under the title "A false narrative?" The quote reads "Instead of benefiting from another three decades of business-as-usual growth, where world oil demand can reliably be counted on to grow at least 1 percent a year, oil sands producers can expect to be operating in a sharply contracting global market that would shut down as much as half of today's nearly 97 million barrels per day of production."
Quoted from Jeff Rubin. "Evaluating the need for pipelines." September 2017.

Steve says FIRST OF ALL, DOES
THAT RING TRUE WITH WHAT YOUR
SOURCES TELL YOU?

The caption changes to "Pipelines and the future."

Elena says SO I THINK
JEFF'S RIGHT ABOUT THE GLOBAL
CONTEXT AND THE LIKELIHOOD THAT
GROWTH WILL NOT CONTINUE AS
WE'VE SEEN IT.
I MEAN, THAT'S WHAT WE WERE
TALKING ABOUT EARLIER WITH PEAK
DEMAND.
IN TERMS OF THE OILSANDS, IT'S
HARD TO EXTRAPOLATE FROM THAT
GLOBAL PICTURE BACK TO CANADA
BECAUSE THERE ARE A LOT OF OTHER
VARIABLES.
WHAT OPEC DOES, YOU KNOW,
GEOPOLITICAL DISRUPTIONS IN
VARIOUS PARTS OF THE WORLD THAT,
YOU KNOW, MAKE IT MORE
ATTRACTIVE TO INVEST IN CANADA.
THE BIG WILD CARD FOR CANADA IS
PROBABLY THE LONGEVITY AND THE
PRODUCTIVENESS GOING FORWARD OF
PLACES OF SHALE PLAYS IN THE
U.S., SUCH AS THE PERMIAN.

Steve says FRACKING?

Elena says YES.
SO IF PARTS OF THE U.S. RIGHT
NOW RAMPING UP PROVE, AS SOME
ARE STARTING TO SAY, TO BE LESS
LASTING THAN THEY MAY HAVE
LOOKED EVEN A YEAR AGO OR TWO
YEARS AGO, IF THEY GET TAPPED
OUT, THEN THE DEMAND FOR THAT
CANADIAN CRUDE COULD INCREASE.
THESE ARE FACTORS THAT ARE STILL
BEING WEIGHED.

Steve says HE'S TALKING ABOUT
AN INDUSTRY HALF THE SIZE IN THE
FUTURE OF WHAT IT IS TODAY.
I MEAN, THAT'S MASSIVE.

Elena says THAT'S A
PROVOCATIVE STATEMENT.

Steve says SO WAS HIS
PREDICTION OF OIL AT 200 dollars A
BARREL WHICH DIDN'T COME TRUE.
HOW RELIABLE DO WE TAKE THIS ONE?

Elena says I'M NOT SURE
I WANT TO, YOU KNOW, SORT OF
HANDICAP THOSE ODDS.
I THINK, AGAIN, THERE ARE SO
MANY OTHER FACTORS.
IT'S NOT JUST ABOUT PRODUCTION,
IT'S ABOUT DEMAND.
EVEN IF, FOR EXAMPLE, CANADIAN
OUTPUT CONTINUES TO GROW, IF THE
U.S. OUTPUT CONTINUES TO GROW AS
WELL, WHERE IS CANADA GOING TO
SELL ITS OIL AND WHO'S GOING TO
BUY IT?
AND IF YOU DON'T HAVE PIPELINES,
THEN YOU'RE GOING TO HAVE
TROUBLE FINDING CUSTOMERS AND
YOU'RE GOING TO HAVE TROUBLE
FINDING CUSTOMERS OTHER THAN THE
UNITED STATES.

Steve says EVER IS A LONG TIME.
BUT DO YOU EVER IMAGINE WE ARE
GOING TO GET TO A POINT WHERE IT
DOESN'T MAKE FINANCIAL SENSE TO
INVEST IN A PIPELINE?

The caption changes to "Subscribe to The Agenda Podcasts: tvo.org/theagenda."

Elena says IT PROBABLY
DEPENDS WHICH PIPELINE.
SO I THINK RIGHT NOW WE'RE
HAVING THIS CONVERSATION AS THE
NAFTA TALKS ARE HEATING UP AGAIN
IN OTTAWA.
I DON'T THINK THAT ANYONE WOULD
HAVE THOUGHT 18 MONTHS AGO THAT
BUILDING A BUSINESS THAT RELIED
SO HEAVILY ON, YOU KNOW, ANY
KIND OF CROSS-BORDER CUSTOMER
WOULD BE SO RISKY.
APPARENTLY IT IS.
AND WHEN YOU THINK ABOUT THE
ENERGY INDUSTRY, SOMETHING LIKE
97 percent OF OILSANDS EXPORTS STILL GO
TO THE UNITED STATES.
SO PIPELINES LIKE ENERGY EAST,
AND THESE ARE WHAT PEOPLE LIKE
FRANK McKENNA HAS POINTED OUT,
THOSE ARE WAYS OF DIVERSIFYING
YOUR CUSTOMER BASE.
YOU WANT TO MAKE SURE YOU'RE NOT
ONLY SELLING OIL TO THE UNITED
STATES.
AND I THINK THIS NAFTA MOMENT IS
A VERY CLEAR ILLUSTRATION OF THE
PERILS OF HAVING ONE COUNTRY,
EVEN IF IT IT'S A HUGE AND
USUALLY FRIENDLY COUNTRY, AS
YOUR CUSTOMER.

The caption changes to "Producer: Katie O'Connor, @KA_OConnor."

Steve says THAT'S ELENA
CHERNEY, THE GLOBAL ENERGY
EDITOR AT THE WALL STREET JOURNAL.
THANKS FOR COMING IN TO TVO
TONIGHT AND HELP US OUT WITH THIS.
THANKS SO MUCH.

Elena says THANKS, STEVE.

Watch: Beyond Peak Oil