The price is right – but is there the will to expand Canada’s oil and gas sector?

As the world turns away from Russia and looks for other, more stable supplies of oil and gas, producers here in Canada are hoping to take advantage of that demand.

But with the Keystone XL pipeline still shelved with all but a toe tag on it, and Ottawa still pushing for a more-green agenda that doesn’t include oil and gas.

But as the price at the pumps continues to climb, will that translate into greater investment in the oil patch?

One of the major players in Canada’s oil and gas sector, Cenovus Energy, is playing it safe.

“Overall, even with higher prices, Cenovus will continue to be disciplined with our capital investment and you should not expect us to diverge from the budget we released in December 2021,” says Reg Curren, a spokesperson with Cenovus Energy. “We are concentrating on de-leveraging our balance sheet and increasing total shareholder return.”

But there will be an uptick in production, expansion and improving delivery infrastructure, states Curren.

“If higher prices persist, we believe it will allow Canadian producers to consider adding incremental production to help offset disrupted Russian crude oil supplies through increasing output at existing projects by de-bottlenecking or smaller-scale brownfield expansions,” he says.

Ben Brunnen, vice-president, oil sands, fiscal and economic policy, Canadian Association of Petroleum Producers (CAPP), says that the sky-high price of oil likely won’t boost investment in Alberta, as a firm commitment from Ottawa to develop domestic oil production is needed.

“The price spike for oil we are currently experiencing due to Russia’s invasion of Ukraine is unlikely to entice producers into changing their investment plans in the near term, because it is a reflection of the uncertainty and volatility in the market, which isn’t a strong basis for investment,” Brunnen says. “To enable investment in growth projects we would need longer-term stability in global supply and demand as well as a clear signal from the federal government they would support larger investments in energy infrastructure to grow Canada’s natural gas and oil production and capacity to export around the world.”

Curren agrees that the political will is needed to boost investment – and points to the industry’s willingness to embrace reducing the carbon footprint is a major step towards that.

“It’s important industry and government continue to collaborate on ways to help make sure Alberta’s oil and natural gas resources are both cost and carbon competitive with other jurisdictions,” Curren points out. “This includes cooperating on the work being done by the Oil Sands Pathways to Net Zero Alliance, which has a longer-term ambition to reach net zero emissions by 2050.”

Efforts by Ottawa and Alberta to push forward on carbon capture projects are excellent indicators that the industry is willing and able to meet green demands, and those projects that are reducing the sector’s carbon footprint are not going unnoticed.

“For example, there are ongoing discussions with the federal and provincial governments to ensure the necessary policy and financial support is in place to support the alliance’s ambitious foundational carbon capture and storage project needed to help Canada achieve its climate and economic recovery commitments,” says Curren.