A snowy banana republic. The month of May has been a real humdinger for this country. In the early days, the US announced a seminal LNG export deal with China, killing any prospect for a viable LNG sector on the West Coast. Then British Columbia upended its provincial governance by not electing a government, preferring instead a collusion scheme between those who can’t and those who won’t. It was month that capped off a generalized impression that Canada is finally admitting openly what official discourse has belied for years: that it is no longer open for large-scale job creation businesses and national wealth creation. The exodus of the oil majors from the oil sands, started earlier in the year and continuing unabated, was the clearest sign from real investors and wealth creators were giving up on the Canadian energy sector and heading for greener pastures (pun intended). Pity the poor, homegrown corporate O&G players without any option to exit the landscape; much like the industry itself, they are landlocked and relentlessly shackled to their Canadian assets without any hope of escape.
Canada can’t, therefore won’t. When it comes to large infrastructure investments, capital projects and permanent job creation, the message to would-be investors is simple: Build Nothing Anywhere Near Anyone (hence the acronym banana). Even if the investment is greener than black, such as the Site C Dam project in British Columbia, the consequences of such a construction endeavour becomes unpalatable to the general public. That project is now threatened with cancellation by th
e new political reality of provincial politics. If a hydroelectric project, the very quintessence of renewable energy, cannot overcome the dogmatic myopia of the general public, there is no hope left for any other project advocated by energy players, miners, forestry harvesters, or cleantech proselytes. Though shall not build a pipeline is the official investment mantra of regulators, who toe the line drawn by rent seekers, eco-fanatics, social justice warriors and their brethren. Never mind the blinding fact that oil will move by trains, rather than stay in the grounds according to their theoretical musings – a far more dangerous proposition to public safety. Canada wants solar power for everyone, everywhere, every time, but won’t tolerate the mine from which the raw materials come from. Canada has become a country steeped into the mysteries of real food mysticism but can’t stand the sight or smell of the farms that produce them. Canada wants high-paying jobs
but refuses paying the price of manufacturing, of construction, or carbon emissions (while being oblivious to the hypocrisy of driving their SUVs to a protest rally, or flying a public stunt mission over the oil sands). Canada will gleefully tax carbon but steadfastly refuse to ban petrol-powered vehicles. It has truly become a banana republic in the true sense of the word; and like all such republics, the future ain’t bright.
A lesson in the offing. The Canadian tragi-comedy holds a precious lesson for the oil and gas sector, which suffers from its own banana complex in regards to alternative energies. The industry continues to plough along with nary a thought to the threat posed by renewable energies in the long run. Oil Majors continue to see themselves as oil producers, rather than embrace the notion of being energy enablers. This is a subject that I have addressed in this space on few occasions. The scale of the transformation of the energy business, began recently with the advent of deployable and renewable energy production systems, is a perfect fit for the O&G industry’s managerial wherewithal. The days of the carbon hegemony are no longer assured. The renewable protagonist is baying at the door, and is bound to hound its way into the mainstream. Unless the industry switches its mindset and embrace the energy enabling mantra, it will lose the ability to stay economically relevant to a planet gone green.