Methane emissions in Canada- Alberta, B.C. and Saskatchewan finalize equivalency agreements despite new evidence of under-reporting

On November 5, Canada’s Minister of Environment and Climate Change issued a press release announcing that the federal government has finalized equivalency agreements for methane regulations from the oil and gas industry with Alberta, British Columbia and Saskatchewan, for the next five years. “These equivalency agreements represent a flexible approach that enables provinces and territories to design methane regulations that best suit their respective jurisdictions while meeting equivalent emissions-reduction outcomes to the federal regulations.” These equivalency agreements have been in the works for months, during which time  Environmental Defense Canada, the David Suzuki Foundation, and other groups  have lobbied for regulations to be tightened and for the reporting procedures to be improved.

These same groups were critical of the federal Emissions Reduction Fund, announced on October 29, to reduce methane and GHG emissions.  This $750-million  fund will provide “primarily repayable funding” to eligible onshore and offshore oil and gas firms to encourage them to invest in greener technologies. Details are at the government portal for the Emissions Reduction Fund . The Pembina Institute endorsed the Fund on the grounds that it could reduce emissions while improving health and creating jobs. More critical comments from Environmental Defense Canada are included in the Toronto Star report, “Justin Trudeau offers $750 million to oil and gas companies to slash methane emissions, but critics warn it isn’t enough” (Oct. 29).   

Updated: Scientific evidence shows under-reporting of methane emissions worse than thought

An interview with Dale Marshall, National Climate Program Manager at Environmental Defence Canada, appeared in The Energy Mix on November 16. Marshall criticizes the Equivalency Agreements, especially in light of a new article just published in Environmental Science and Technology , the scientific journal of the American Chemical Society.  “Eight-Year Estimates of Methane Emissions from Oil and Gas Operations in Western Canada Are Nearly Twice Those Reported in Inventories” was written by Canadian government scientists, and provides damning evidence of the problem of under-reporting . The scientific article was summarized in lay terms in the National Observer on November 12.

Canada set its regulations for methane emissions from the oil and gas industry in 2018, targeting a reduction by 40% to 45% below 2012 levels by 2025. It appears that Canada will miss its target, with modelling showing the reduction likely to be closer to 30%. The Pembina Institute has published fact sheets on methane regulations, and the International Energy Agency posted an overview of Canada’s methane emissions regulations and levels in February 2020 here .  The dangers of methane and the problem of underreporting fugitive emissions have been summarized in a January 2020 report from the Canadian Association of Physicians for the Environment (CAPE), Fractures in the Bridge: Unconventional (Fracked) Natural Gas, Climate Change and Human Health.  

Employment and Job loss experience of Canada’s oil and gas, coal workers

In September 2020, Canada’s oil and gas industry employed approximately 160,100 workers –a 0.9% increase from August 2020, but a 14% drop from September 2019.  In that same one-year period, employment in the services sub-sector decreased by 29%;  the pipelines sub-sector decreased by  30% and the exploration and production sub-sector increased by 3%.  These statistics are based on Statistics Canada’s Labour Force Survey (LFS) data,  made available on the  Employment and Labour Force Data Dashboard provided by PetroLMI, a labour market agency specializing in the oil and gas industry, jointly funded by government-industry.  Their September 2020 blog is here, summarizing the current trends ; an archive of PetroLMI reports re the trends and forecasts is here – most recently, The LNG Opportunity in Canada: Employment Prospects and Requirements (June 2020).

In addition to providing regular labour force data by industry, on September 22 Statistics Canada released two studies in its Economic Insights series:  How Do Workers Displaced from Energy producing Sectors Fare after Job Loss? Evidence from the Oil and Gas”  Industry    and How Do Workers Displaced from Energy producing Sectors Fare after Job Loss? Evidence from coal mining. Both studies use data, (including age),  from Statistics Canada’s Longitudinal Worker File, covering the period 1995 to 2016, for  workers permanently laid off from those industries..  

Job loss experience for oil and gas workers

How Do Workers Displaced from Energy producing Sectors Fare after Job Loss? Evidence from the Oil and Gas” Industry reports that “job loss leads to substantial and persistent earnings declines”, although “three years or five years after being displaced, a significant fraction of workers displaced from this sector earn more than they did in the year prior to job loss.”  Data show that re-employment has become progressively more difficult, and for workers laid-off in 2015 or 2016, less than two-thirds found paid employment in the following year, with most moving outside the oil and gas industry – construction being the most common sector for re-employment. CBC produced a summary of the Statistics Canada report in an article here , augmenting it with personal stories and commentary from economists.

Coal workers’ job loss experience

Similar analysis (the reports are authored by the same Statistics Canada economists) appears in  How Do Workers Displaced from Energy producing Sectors Fare after Job Loss? Evidence from coal mining . Contrary to the trend for oil and gas workers, finding employment within a year of lay-off became easier for coal workers more recently: 67% for workers laid-off in 1995 compared to 89% for those laid-off in 2005 . However, regarding earnings loss, the report compares coal data with all industries, and states: “These numbers imply that about half of workers laid-off from coal mining and from other industries during the 2004-to-2011 period saw their annual wages and salaries drop by at least 30% in the short term. Since coal miners are paid higher-than-average wages …. the median declines in annual wages and salaries of coal miners displaced from 2004 to 2011 amounted to roughly $14,800 (in 2016 dollars) in the short term, more than twice the median declines (of about $6,100) experienced by other laid-off workers.” Conclusions are similar to those in the report on oil and gas workers: a  transition to “green jobs” has not materialized, and “ for many coal miners and other workers, job loss leads to substantial and persistent earnings declines”, but, “the financial consequences of job loss are not uniform for all displaced workers. …. Three years after job loss or five years after job loss, a significant fraction of displaced workers earn more than they did in the year prior to job loss.”

Saskatchewan respondents rank comparable salary and preserving home equity as most important factors in a Just Transition

A provincial election campaign is underway in Saskatchewan – a province with a strong oil and gas production industry, and where 72% of electricity comes from coal and gas.  Although the conservative-leaning Saskatchewan Party led by Scott Moe is favoured to win the election on October 26th, a new report published by the Saskatchewan Office of the Canadian Centre for Policy Analysis on October 14 reveals that there is strong concern about climate change, and surprising support for a shift to renewable energy in the province. Transition Time? Energy Attitudes in Southern Saskatchewan  was written by professors from University of Toronto, in collaboration with Emily Eaton,  Associate Professor at the University of Regina in Saskatchewan. It reviews the energy politics of the province briefly, and reports the responses of over 500 residents to a survey of five broad issues: climate change, transition, regional differences, energy production, and SaskPower.

While over 40% of respondents were worried about climate change, 50% disagreed that “it is necessary for Canada to phase out oil and gas production as our contribution to mitigating climate change”.  65% of respondents agreed that “Canada can continue to develop fossil fuels such as oil sands in Alberta and still meet its climate commitments” (only 18% disagreed).  Regarding carbon pricing, 47% strongly disagreed that Saskatchewan needs a price on carbon emissions. (Saskatchewan is one of the provinces currently fighting the federal carbon tax in the Supreme Court ).

Yet in a contradictory way, 60% of respondents supported a phase out of oil, gas and coal production in Saskatchewan – with 23% favouring a 10-year timetable for such a phase out. Even in oil-producing areas, half of the population agreed with phasing out fossil fuels, and 30% within 10 years or less. Respondents rated comparable salary and benefits, and maintaining equity in house/property values as the most important considerations in a Just Transition- more important than support and training to transition to new roles, and employment opportunities in your current community.  Saskatchewan was one of the provinces visited by the federal Task Force on Just Transition for Canadian Coal Power Workers and Communities, and the views of Saskatchewan citizens were reported in the Task Force’s 2019 report, What we Heard.   

The discussion which concludes the paper states that “it is clear that there is an urgent need for honest climate change leadership in the province. The fossil fuel industries have attempted to obstruct a transition to zero-carbon economies by suggesting that climate change can be tackled while continuing to produce fossil fuels, a belief widely held in Saskatchewan and propagated by both the government and the official opposition.”

$320 million federal aid to Newfoundland oil and gas industry, yet layoffs continue

On October 8, both Suncor and Husky Energy announced new layoffs in their Newfoundland oil and gas operations. A week earlier, there was an announcement by Irving Oil that it would not proceed with the purchase of the Come by Chance oil refinery -yet another blow to the floundering Newfoundland industry.  “Here’s what could happen if the Come By Chance refinery shuts its doors” (CBC, Oct 8) estimates potential job losses of 1,400 jobs when spin-off impacts are considered, if the plant is closed.  TradesNL, an umbrella organization of 16 building and construction trades unions in the province, which released this reaction to the news.  

Unifor has been lobbying for government aid for months – and on September 16, the union organized a public rally calling for government support. On September 25, the federal minister of Natural Resources answered the calls for help by announcing a $320 million aid package, to be targeted at safety, maintenance and upgrades, and at stimulating employment.  In a press release, Unifor states: “Unifor expects to see some of the funding be directed at long-overdue maintenance onboard the Terra Nova and Hibernia offshore facilities where 750 members of Unifor Local 2121 work.”  The decisions on how the $320 million will be spent will be guided by a new  Oil and Gas Industry Recovery Task Force, appointed by the provincial government on September 25 to “focus on immediate actions required to sustain the offshore industry in Newfoundland and Labrador and provide suggestions for how best to utilize the $320 million in funding from the Federal Government to maximize value for all Newfoundlanders and Labradorians.”  To date, only the two co-Chairs have been appointed.

On September 24, the provincial government also announced “the establishment of a new offshore exploration initiative to provide companies with the incentive to drill more wells in the best prospects. This is a policy measure that will allow all future bid deposit forfeitures to be reinvested as received, resulting in an injection of hundreds of millions of dollars in support of growth in our offshore petroleum industry. “ The press release was accompanied by this statement from Siobhan Coady, Minister of Finance:

 “The value of the oil and gas industry to our province cannot be overstated, nor can it be replaced by any other sector in our economy. Upwards to 30 per cent of our GDP, 13 per cent of our labour compensation and 10 per cent of all employment is attributed to this industry. We will support this industry in any way that we can, because it supports our province.” 

The ends to which the government and industry are prepared to go are hinted at in a recent blog by WWF on October 1: Canada Provides Funding for Oil And Gas Development In Newfoundland and Labrador amidst Federal Scientists’ Critique of Flawed Environmental Assessment.

Total, Exxon announce stranded assets but some Canadians aren’t listening

Just as the long-predicted weather disasters are coming to pass before our eyes, so too are the stranded assets of the oil and gas industry.  In July, French fossil fuel multinational Total announced  “asset impairment charges” caused by low oil prices, and “in line with its new Climate Ambition announced on May 5, 2020 , which aims at carbon neutrality, Total has reviewed its oil assets that can be qualified as “stranded”, meaning with reserves beyond 20 years and high production costs, whose overall reserves may therefore not be produced by 2050. The only projects identified in this category are the Canadian oil sands projects Fort Hills and Surmont.” Total also cancelled its membership in the Canadian Association of Petroleum Producers (CAPP) , as had Teck Resources in May 2020 as part of the cost-cutting which saw it withdraw from the Frontier mine project in February.

As reported by Bloomberg News on August 5, a regulatory filing to the SEC by Exxon announced that low energy prices render as much as 20% of its oil and natural gas reserves as stranded assets, without book value. The  massive Kearl oil-sands mine near Fort McMurray Alberta was the only operation specifically named in Exxon’s filing, and a separate filing of Exxon subsidiary Imperial Oil Ltd also singled out Kearl’s reserves as “imperiled”.

The Energy Mix summarized and commented on these developments in “Colossal fossil Total declares $9.3b in stranded assets in Alberta tar sands/oil sands” (July 31) and “Exxon rips up $30 Billion rebuilding plan, could declare stranded assets at Kearl Lake” (Aug. 19).   

A different future?

In sharp contrast to the companies’ announcements: the Alberta office of Price Waterhouse has posted a rosy consultants’ view in a series titled: Energy Visions 2020: What’s ahead for Canada’s oil and gas industry . Part 1, “The Evolving Role of oil and gas in the Energy Transition” acknowledges the current low demand, but hones to that persistent industry view: “Given the cyclical nature of the industry, we anticipate that within five years we’ll have moved into a period of recovery and growth. By then the current oversupply will likely have been drained.”  PWC’s prescription for Canadian oil and gas producers: “to differentiate themselves from global competitors, they’ll have to continue to focus on important differentiators aligned with environmental, social and corporate governance (ESG) measures… Canadian oil and gas companies are already global leaders on some ESG principles. These include demonstrating high employee health-and-safety standards, a record for empowering and investing in the communities in which they operate, support for reasonable government carbon pricing and a commitment to new technologies to reduce emissions. But the challenge remains around how our industry communicates this story to investors.”

Part 2, “Finding Opportunity for Canada in the Global Energy Transition”  states: “Canadian energy companies have the opportunity to proactively address climate issues, take advantage of new opportunities where possible and find ways to create additional value for their communities, employees and shareholders.… We can and must raise our profile by highlighting all the positive achievements we’ve made in producing our energy more efficiently by using new technologies…”. Post Covid, “there may be opportunities for those companies that have the desire and balance-sheet strength to pursue new capital-intensive energy investments. Companies for which diversification isn’t an option must stay focused on their core business and continue to execute more efficiently, digitally and diversely than any global competitor……..We can expect that federal government support for all industries will come in some form of infrastructure investment, and the adoption of alternative energies will likely be part of the government’s infrastructure agenda.“

Finally, Part 3, “New World, New Skills: Preparing your workforce for the Energy Transition” discusses “The Transformation Imperative”, but focuses on automation and artificial intelligence as the disruptors. The report offers the general advice that employers need to create an “upskilling” organizational culture for their employees, while acknowledging that millennials rank the oil and gas as their least attractive career destination.