Série Energy Drivers – Le secteur pétrolier et gazier du Canada serait‑il en voie d’amorcer une transition énergétique?

00:00:01 - 00:01:09

Lance Mortlock

Welcome to the next episode of the Energy Drivers podcast. I'm Lance Mortlock, your host for today's discussion with Tristan Goodman. He's the president and Chief Executive Officer of EPAC, the Explorers and Producers Association of Canada. Throughout our series, we invite Canadian energy and industrial leaders to engage in discussions on key issues, share insights and pose challenging questions. We're pleased to welcome Tristan, who brings over 25 years of experience in oil and gas, including oilsands.

His professional journey spans regulatory and private sectors, having worked with organizations like the Alberta Energy Regulator, Conoco Phillips and Shell. Tristan and EPAC focus on amplifying the voices of Canada's conventional energy producers and small oilsands producers, advocating for sound government policy. Today, we'll discuss EPAC’s purpose and vision, recent policy developments and key opportunities on the horizon for Canadian energy producers in the energy transition. So, Tristan, thank you for joining our podcast.

00:01:10 - 00:01:11

Tristan Goodman.

Well, thank you very much. Looking forward to it.

00:01:12 – 00:01:22

Lance Mortlock

So, to kick things off, some of our listeners may not be familiar with your organization. So, can you maybe tell us a little bit about yourself, EPAC and what you're aiming to achieve?

00:01:23 – 00:02:12

Tristan Goodman

Sure. So, I have a diverse academic background across different disciplines, economics, science and law. Worked here, Houston and in London, in various capacities.

And, the organization it really is looking out, trying to drive growth in our energy business in Canada. The opportunity there is tremendous. And that's the focus that we're trying to get towards. We want more investment to come to this country and for our members to both grow their businesses and also make sure the profit they're developing is attracting new investment.

It helps all Canadians from coast to coast to coast. And so, when we succeed, I think, I'm always very proud to see many families across Canada also succeed.

00:02:13 – 00:02:45

Lance Mortlock

As part of EPAC’s mandate,  your organization frequently comments on critical energy policy issues in Canada. And I think you mentioned maybe you spoke to media this morning on that. How do you develop your position on different items?  Does the association's board weigh in? I know that includes a number of the largest Canadian producers. They contribute in some way, but maybe just talk a little bit about that dynamic and how it works and to some extent how you represent.

00:02:46 – 00:04:28

Tristan Goodman

So, we have a very diverse board.

We have over 80 plus producer members in the association representing the majority of conventional and small oilsands production. When you talk to the CEOs and you understand where senior executives within the companies see opportunities, that's really what's driving our policy. So, the board is the main place that goes, it's very representative across every main producing jurisdiction from Manitoba through Saskatchewan, Alberta and into British Columbia.

That's the main focus. And it also caters both to natural gas and oil. It's not just about one company's position. That's sort of, broadly, I think one of the reasons the organization works so well is that everybody has an equal voice. And so very small companies can have a tremendous influence on our policy position. And the reason that's important is the big companies are already successful and they are critically important to Canada.

But what you're looking for, is the next entrepreneur that is going to build a new Tourmaline, build a new Canadian Natural, build a new ARC resources. And there are many. Whitecap, for example, is a prime example of that. I can remember starting in EPAC not long ago and they really weren't that big. And now they're, an investment grade company and just a tremendous result. We want all the small companies to move into that space. It's healthy for Canada. It creates additional jobs and competition. And so, it's very important. It's a broad representation of the entire industry.

00:04:29 – 00:04:31

Lance Mortlock

So, is entrepreneurship still alive in the sector?

00:04:32 – 00:05:31

Tristan Goodman

It is very much so. There's no question we've seen consolidation, but we've also seen multinationals really broadly pull out of production.

There are some exceptions. Petronas is a new entrant and doing very well. But in general, companies actually I used to work for have really largely left Canada or they've moved into other parts of the business, such as the midstream part of business. The real risk, the real entrepreneur aspects of this industry and where it all starts, and this is important for governments to understand, is in the production of oil and gas.

Everything else is based off that. The geology drives everything. We're very fortunate in this country to have outstanding geology, both in natural gas and in conventional oil, small oilsands and large oilsands. But without that, you're really not going to be able to build LNG plants or major projects are not as important if you can't fill them with Canadian product. So that's quite critical.

00:05:32 - 00:06:04

Lance Mortlock

Let's discuss the broader energy context in Canada, Tristan, if we can. The industry appears to be receiving more public policy support, record production levels, including approximately 4 million barrels of oil per day in Alberta. However, we also see relatively low commodity prices and ongoing regulatory challenges. So maybe what's your perspective on the current market conditions and the near-term outlook for the oil and gas sector in this country?

00:06:05 - 00:08:18

Tristan Goodman

So, I'll start at the end, which is you are going to see a renaissance in the development of both natural gas and oil in this country. It will almost guaranteed to increase and move forward. The degree at which that can occur will depend on the product, but it's really high across natural gas and the various different types of oil that we can develop.

And there's specific macro reasons for that. And there's also geological reasons in Canada for that. So, the market is strong. When you look in the immediate term, that's actually not, that really shouldn't be the focus. You really miss the strategy boat if you're looking today or three months out. The individual companies have to do that in their boardrooms. But within a policymaking sphere, what you're really should be doing is looking out a year, five years, ten years. And I think governments actually, to be fair, are starting to do that. I don't think they're doing it perfectly yet. I don't think the policies are 100% right. But I do think various governments are starting to realize, okay, we have a very good opportunity here provincially and federally.

How do we capitalize on that? They're testing. They're trying with some success also with some failure. In some cases, policies are not working and they're going to have to evolve or you're going to be held back. But I think in general it's very positive. And the reason for that is it's all about the draw outside of Canada, whether that's coming from the United States, whether that's coming from China or most importantly, I think people are forgetting other areas.

We always talk about the same countries, you know, the United States and China. We should be really looking at India. I mean, India, if you look at oil refining capacity, they are not going through the electrification in vehicles that China is seeing. And that is a tremendous market for oil. But it is about the market, then it's about the geology and then it's about figuring out how we balance all the competing Canadian values of economic, Indigenous, environmental. It's possible to do, we are improving, We're not there yet.

00:08:19 - 00:08:59

Lance Mortlock

I came to Canada 18 years ago. And I think we worked together probably 16 years ago, so time flies when you’re having fun That's right.  When I think about some of the organizations that were here that, I, in some cases had the opportunity to work organizations, oil and gas organizations from US, from Asia, from Europe, many of those companies have gone. With the renaissance that we're seeing, the MOU signed between the province and the feds, you know, we're moving in a more positive direction. It certainly feels like that. Everybody in Calgary has got a bit more of a spring in their step. Can we expect those companies to come back?

00:09:00 – 00:09:01

Tristan Goodman

Yes and no.

00:09:02 - 00:09:22

Lance Mortlock

And one of the things just to clarify, when you look at the production profiles, particularly in North Dakota, the Bakken. Are some of the US companies getting a little bit nervous? They look north of the border and they're like, that's a lot of reserves. And then there's Venezuela in the mix, some geopolitics. It's always interesting.

00:09:23 – 00:11:04

Tristan Goodman

It's very interesting. So, I mean, the answer is both yes and no. Will you see a return to the historical 1970s and ’80s that many of us would understand and who built some of these buildings that you can sort of see in the hubs of Calgary, for example? I don't think you're going to see a mass return in the production space.

It will be slow. What you are going to see is, you are going to see Canadian-based large companies continue to develop those resources over the coming two, three, four years. And then you may see multinationals re-enter. They need more stability. They need more certainty. They're less risk taking. And they don't actually understand the market as well often. There are some exceptions. So, you know, where you tend to have a multinational focus on just one province, that's quite effective. But a lot of them have just shifted where they're going. But you are going to see some return over time. The resource is just too good. And it's not just on the oil side. It'll be the natural gas.

I think we all understand that the United States is going to face an energy security problem over time. They are moving into a flatline situation. The really good rock has sort of been chewed through. I always equate it to a jam jar. I like the analogy. We've been eating all the jam out and someone has suddenly realized they turn over the lid and there's that little dollop left.

They're getting towards little dollops and they're going to have to return to Canada at some point. But it may be the independence, as well, coming back.

00:11:05 – 00:11:09

Lance Mortlock

And it seems like they're relooking at Alaska in different ways in terms of gas and oil development.

00:11:10 – 00:12:10

Tristan Goodman

It's all pretty tough, is the issue, because this is what often happens with governments. They see large reserves.

Venezuela is a perfect example. And they start with the reserve or the production profile. They forget that when you run your discount, cash flow calculations or other things, you have to be able to make money on these things. Canada, you can make money. We are very, very lean. We had to go through hard times. We're just simply much more efficient than others and there's more opportunities.

So, I think you'll see the easiest things always get developed first. That's where Canada's, we're sort of next in line. I've been to Alaska many times. I don't actually work up there. It's a tough environment. You can do it, but it's pretty expensive. It would be the same with the Venezuela argument. You know , clearly oil and a regime change is on the table there.

That's a decade long plus excursion that is a lot of work.

00:12:11 – 00:12:13

Lance Mortlock

I mean I'm those assets have been underinvested for a decade.

00:12:14 – 00:12:16

Tristan Goodman

That's right. You’re almost having to start over actually. Yeah.

00:12:17 – 00:12:27

Lance Mortlock

I mean, we used to be the marginal barrel up here, but it doesn't feel like that anymore given the leaning and the efficiency and the operational excellence and all the things that we've done over since COVID.

00:12:28 - 00:13:25

Tristan Goodman

Correct. I think we are definitely not the marginal barrel anymore. Now, are there costs? Yes. Do we need to improve our cost structure in this country? 100%. We lack productivity. That's generally understood. We have improved efficiency and I think you'll see more opportunities for governments to, in a way, and people are a bit blunt when they say this.

But to some extent, we still need a bit of an attitude of get out of the way. We have to have sort of a less, sort of tacit approach to slightly tweaking and improving a bad system. And we need more substantive overhaul. That will lead to growth, that will lead to private sector coming back. And that's, I think, where the opportunity is. Good first steps, but we need to move from tactical to strategy.

00:13:26 – 00:14:08

Lance Mortlock

The devil's in the detail. The energy transition is a key subject in our space. You know , Our firm, EY, we advocate for policies that balance energy affordability, security and environmental needs. The trilemma. Recently, Canada's become more aware of affordability and security, it seems. Do you share the sentiment and how do you think this narrative will shape the conversation about the energy transition in the coming decades?

And I guess Tristan what I'm getting at is this idea that, yeah, the trilemma is important. It feels like a little bit of a slowdown on the environmental side. Longer term, though, we still have an energy transition need out there, climate change is ever in front of us. Like what's your perspective on all of that?

00:14:09 – 00:15:40

Tristan Goodman

So, in Canada, you are always trying to, and different people put it in different ways, but you're always looking at the economic, the environmental and in our case, often the Indigenous. Indigenous in Canada, it's legally hit a number of recent court challenges that are problematic.

We will work through those. But on a business side, I think there are really quite constructive and positive opportunities both for Indigenous Nations and communities as well as business. There's a better understanding: equity, ownership, direct participation, it's definitely improving, that one I think we can sort of continue to move forward on.

Economic has lagged by almost every indicator, in comparison to other developed countries or in comparison to the specifics of energy, and that needs to be fixed. And I think all governments have recognized that. On the environmental it is not about pulling back on environmental. We have Canadian values. We have Canadian standards. Those are going to remain in place. That's really not a negotiable. It's the way you go about those. There's a big difference between something that is hitting a specific target that costs $15 billion for an industry or $1 billion, and those numbers are actually accurate.

You could do the exact same, it doesn't matter what it is. You have to get these things more pragmatic. You have to find ways to make it efficient rather than punitive or costly.

00:15:41 – 00:16:45

Lance Mortlock

Yeah. I mean, I was talking to someone the other day about this. You know, if you take the total emissions of CO2 from Canada, which I think is about my numbers might be wrong, Tristan, but I think it's about 1.5% of global emissions.

And then you compare that to India and China that have rapidly developed coal power generation, are emitting CO2, you know, at astronomical levels. And you know, you go back 10 years ago when we were talking about LNG in this country and you're like, why didn't we do more? Yeah, because that would have contributed more to fixing some of the global emissions, had we given more of our LNG to China and India.

But we didn't. And here we are, I guess kind of half glass full. We've got this MOU signed between the feds and the provinces. It certainly feels like, you know, a sea change. How significant is that move in your mind that MOU being signed.

00:16:46 – 00:18:23

Tristan Goodman

So, it's certainly a step in the right direction.

Both governments need to be recognized that it's tough to get there. The question, and again is and you said it, the devil is in the detail. So how does it get implemented? And that will be the key. And it's not just about building a pipeline, or sort of increasing production on that side. It's all the other many things that are improvements if they're implemented correctly. The question then is, is that enough? And that's where it's a pretty simple piece that people need to understand that I think all governments continue to miss. They get stuck in the details and they forget the most basic, fundamental thing. Canada needs to compete internationally for the next marginal investment dollar. And if we have policies here that are putting us at a competitive advantage, that do not need to be in place, those should be removed.

And that's the main issue. Right now. Some of this is, you know, it's nice that we're going to move to carbon pricing of $130, but our largest competitor is often the United States and they don't have a price on carbon. That puts us at a competitive disadvantage. And let's be blunt, it's not just about the producers, it's about Canadians, because the revenue generation directly affects all of us. We drive on roads. We need a strong military. We have to have universal health care. We need public education. These things are not free and Canadians are not recognizing, you need to create a better balance.

00:18:24 – 00:18:52

Lance Mortlock

It's interesting that you should share that. I was, doing a little bit of investigation on the economic contribution of Trans Mountain in 2025.

I think the numbers were, it contributed in terms of GDP impact, 0.25% to the Canadian economy in 2025. The rest of BC combined all sectors 0.23%. So, you've got one pipeline that contributes more economically to the country than an entire province. It blows my mind.

00:18:53 – 00:18:54

Tristan Goodman

Yeah. It's remarkable.

00:18:55 – 00:19:15

Lance Mortlock

And so how do we get and we've had Goldy Hyder on this show. We've had Dr. Jack Mintz talk about the economy and they all say the same thing, we're so far behind economically and social programs and environmental programs cost money. Where is that money going to come from? We can't continue to borrow our way through this problem.

00:19:16 – 00:21:35

Tristan Goodman

Correct. That's the problem. And that's also, though, the opportunity. And again, we want to look at this in a constructive way.

All governments, regardless of political stripe, have recognized we have some problems to fix. This has not worked. Some of the disorganized, almost radical sort of environmental approaches that aren't actually meeting any real targets or reductions. You need to actually get to pragmatism, get to realism and then you need to say, okay, economic growth is good. The part I think that people are missing is, a lot of these items still remain quite tactical.

We're going to change this piece or this little piece or that little piece. Now, eventually you are going to need a fundamental shift in the frameworks, in how we go about evaluating projects, building projects, actually making sure that those people that are truly, directly and potentially negatively affected, those are the people consulted, not folks, miles and miles away from the development.

I can fully appreciate if a pipeline is coming through a traditional territory or through your private property. Of course, there should be a lot of engagement with those folks, but that's not what's happened. What has happened is we are doing really what are foolish things. Moving anthills. No, you don't need to do things like that.

Making sure snails are protected. Okay. Hang on. For some people, that's a food source. This is getting ridiculously out of hand. So, I think at some point you're going to need to reconsider the strategic frameworks that exist. Now, to be fair to governments, they have to start somewhere. So, the provinces are trying to start somewhere with tactical, but eventually they're going to have to move into broader reform.

And we're not discussing that yet. And we need to start discussing that. We still have, you know, the ways, nice to have a Major Projects Office, but the current laws are often in place and that isn't going to necessarily help us. It's going to improve the situation, but it's not going to get us to I think what Canadians are really looking for.

00:21:36 – 00:21:40

Lance Mortlock

Are the Major Projects Office going to be helping us with regulatory reform?

00:21:41 - 00:22:58

Tristan Goodman

The answer is I'm not sure, actually. I mean, right now they're doing different things and I think it's well staffed and it's got qualified people, which is outstanding, and it is an improvement. So again, we want to be positive and we want them to be successful. But I think you are going to have to move from a government picking winners and losers.

Governments are not good in business at picking winners and losers. We all know this. Every government knows this. A free market is going to allocate capital in a much better way. But it's a bit broken in Canada. So better than nothing to start. But we're going to have to move on. And eventually they should be part of more broad reform.

We need to actually look at the fundamental legislative frameworks and structures, rather than continue to have those sit there as effectively a swamp. There's sort of it's like having gumboots on and you're stuck constantly trying to find ways around all the negative things that have been developed over 15 or 20 years, eventually have to clear away all those cobwebs and hopefully that will occur. It's mostly a federal problem, but it also exists in all provinces.

00:22:59 – 00:23:00

Lance Mortlock

Oh yeah. Regulatory layer. And we very rarely take away regulation.

00:23:01 – 00:23:35

Tristan Goodman

That's right. And that we need to get people that actually understand those things because they're costing 40%, 50%, 60% in addition to what should actually be charged. You can't have that.

The Germans, by the way, have a very clever system. They actually use a proportionality test. German governments are not allowed to go any further than is absolutely needed to get the outcome they're looking for. And if they do, it's not considered proportional and it's not considered legal. Courts will actually move back.

00:23:36 – 00:24:04

Lance Mortlock

Interesting. Yeah. Maybe we can learn from the Germans. So, to continue the discussion, the new federal budget was also released in November. And in my view, there were some positives for the energy sector, such as calls to revise Bill C59 and extend ITCs to CCUS. We've also seen a lot of momentum and support behind LNG, including phase two and some other projects.

What are your thoughts on the budget? Did you like it?

00:24:05 – 00:24:17

Tristan Goodman

There's certainly aspects I liked. I mean, there's clearly a pivot within this federal government that they're moving through. They’re I think genuinely interested in LNG and the development of natural gas. And that's very helpful.

00:24:18 – 00:24:20

Lance Mortlock

The transition fuel. Right.

00:24:21 – 00:24:24

Tristan Goodman

Absolutely. That's how they're seeing it. There are restrictions that they'll place that we can manage methane

00:24:25 – 00:24:27

Lance Mortlock

And the BC government has come around to that.

00:24:28 - 00:25:37

Tristan Goodman

They have, yes. And I think the next step is okay, that's a tremendously positive first step. Then we have some tactical pieces we can go through that are also useful. So, I do think the Major Projects Office will be helpful. I do think some of the changes on carbon pricing and moving to what they call a large emitter system that effectively will exempt some of the smaller sort of companies, that can also be helpful. Methane regulations, not perfect, but again, potentially moving in the right direction. Still some problems. So, we go through the list. You actually mentioned another one, CCUS and enhanced oil recovery related to a tax credit, I think that will be helpful. So yes, I think there's things that we can point to in the budget.

It's a bit more complicated when you move over to oil. There doesn't seem to be the same clarity and language coming from the federal government. They seem to be sort of hedging their bets a bit, not being as clear. That's not helping investors as they move forward.

00:25:38 – 00:25:56

Lance Mortlock

You mentioned the Major Projects Office and that was obviously to, you know, put in place to accelerate the development of nation-building projects. Do you believe this new entity will support your members in the broader industry in navigating the uncertainty, and if so, how?

00:25:57 – 00:27:27

Tristan Goodman

Yes, I do. I don't think it is the long-term best outcome because it isn't actually moving to reforming the fundamental problems in the country. I see it actually as a bit of an interim step, but it's a good first step and we should treat it as a good first step.

I think they're going to be able to break down some of the barriers between departments. They're going to help coordinate things. They're going to help make sure that regulators and the civil service broadly understands what the priority are within major projects coming directly from our Prime Minister and other elected officials. That's helpful. They may even move into some aspects of coordinating financing.

Very publicly, not known, they're hunting around Toronto for various staff or other financial areas, around Canada. And that is going to be important. Again, do I like that government is picking winners and losers? Absolutely not. I think it's fundamentally almost a recognition of the failure of the regulatory policies that are causing those problems. It is negative. It is bad. It needs to be reformed so that the private sector can allocate that capital in the most efficient way. And they will come back if there's a clear path. But as an interim step, it's positive.

00:27:28 – 00:27:53

Lance Mortlock

One key consideration, Tristan, is Bill C69 known as the Impact Assessment Act. Some industry stakeholders are feeling that this legislation, while well intended, leads to lengthy timelines and economically unfeasible requirements. Do you think that the MPO will play a role in facilitating changes to that, or you're not sure yet?

00:27:54 – 00:29:56

Tristan Goodman

We're not sure. I don't think governments have turned their mind yet. I mean, effectively, what they've tried to do through the Major Projects Office and associated legislation is almost create an overlay onto what is bad legislation. And the various parts,

C69 was actually the sort of, draft bill that went forward and it created different pieces of legislation coming out of it. It's not really that important, but it is one of the worst pieces of legislation, I think, in Canadian history. It's going to be a case study of how effective, how you would not want to actually pursue evaluation of major projects or undertake, as someone that has substantive background in, evaluating major projects and moving forward and building those sort of regulatory frameworks.

This is a Frankenstein piece of legislation and it needs to go through major reform. It is a significant impediment for investment into this country broadly and it's negatively impacting Canadians. So, it does need to be reformed. The question is when. You also don't want to rush forward, actually and just start,  , ripping it up and have nothing that's not going to work either. But the federal government has in a way sensibly done, is we need to put an interim measure in place, this major projects component, and we're going to hopefully they'll return to C 69 and really the Impact Assessment Act and reform that piece of legislation. And they actually should just go back to, and I'm not even sure if they're aware of this, but they need to go back to the basics.

Go back to Barry Sadler, a very famous Canadian that actually went through and developed impact assessment in the late ’70s and early ’80s. This is not what was not intended at all. So, this seems to be almost a stop development legislation, not protect environment legislation not protected environment legislation.

00:29:57 – 00:31:17

Lance Mortlock

Yeah and we see some of the legislation not only impacting the energy industry but also the mining industry.

I mean, so we're getting new mines approved in Canada, which you would think when you think about some of the critical minerals and metals that we need, you know, lithium, graphite, cobalt, nickel, etc., it can take up to 20 years to get a new mine approved. So, if we're going to electrify, which, you know, apparently is still the target, to electrify, we've seen some provinces like BC and Québec move faster than others.

We're going to need these critical metals and minerals and the rest of the world need them as well. When I look at the top statistics. Bit of a tangent here, Tristan, but it's all good. When I look at the top 50 critical metals and minerals in the world, the top producers, 80% of it's China. I mean, the control and the stranglehold that they have, like, is concerning.

And there's no reason why we can't play a leadership role if we have the right regulation in place to protect the environment. But speedy decisions, good or bad, you know, yes or no, but let's get after it and get the economic engine of the country going. We owe it to our kids.

00:31:18 – 00:32:27

Tristan Goodman

And that's the key.

I mean, we need to connect and understand how wealth flows across the country. I mean, you can look to, you know, any sort of successful country. They're going to have a strong economy. You have to have that as your foundation. And that is not to say, by the way, that you cannot have strong environmental review. Of course you have to have strong environmental review.

Having spent 20 years of my life in a regulator undertaking strong environmental review on some very expensive and large projects, and so far having very positive outcomes on the environmental side, you can do both. But you've got to actually not just have one technical expert that is concerned about, I always call it the hair end of a trilobite, that isn't going to work.

You have to have a more fulsome discussion. Technical expertise is important in each rabbit or ungulate or fish. That has to be considered in reference to the other side of these equations, whether that's Indigenous or economic.

00:32:28 – 00:32:56

Lance Mortlock

Yeah. Speaking of nationally significant projects, we talked a little bit about LNG Canada phase two, there's Pathways Plus, these are some of the projects that are on the shortlist to receive significant federal support and potentially funding. How important are these projects for Canada's energy transition and sector growth, particularly LNG and Pathways? And I believe that Pathways may be, if built, the largest carbon capture system ever built in the planet.

00:32:57 – 00:34:19

Tristan Goodman

I think it probably would be. Yeah. So, I mean, obviously from the LNG side and I think you've said it well and everybody even remotely connected in any way with energy, understands this. We have got to get our house in order around LNG and not miss another opportunity. And if you're interested and actually, I like, working often with British Columbia and some of the ministers and elected officials there. They've figured this out. They've directly connected LNG to health care. To be frank, I think they care more about health care.

I'm okay with that. That's a good connection. You want to improve health care. You want to reduce your deficits in government. You want to support public education. You want LNG going. And it backs way up into Alberta and other provinces. It flows into all other provinces and territories in Canada when it goes, it's just the way the money flows around the country, whether it's a tax revenue, whether it's from other sort of transfer payments and such forth.

So, LNG, I think everybody is fairly aligned on moving that forward. And I think there's a lot of things going well, actually, in there. I would include Ksi Lisims[DJ1] [SB2]  in that project list, by the way. That's a pretty decent initiative. It's a large project.

00:34:20 – 00:34:21

Lance Mortlock

Will that be owned and operated by Indigenous groups?

00:34:22 – 00:36:10

Tristan Goodman

Well, the answer is, I'm not sure, but I think there's definitely going to be some degree of ownership in many of these things from Indigenous groups.

We want that, it's very positive for Indigenous groups. They have a revenue stream that they manage and they control. And of course, also there's going to be learning opportunities. So, I can remember my very first day. It's been a long time. It's probably now going on 30 years. I remember my very first day of work and sort of starting then and learning the business.

You need to learn these things and you do that through experience. So, we want our partners, and they are genuine partners in the Indigenous community and indigenous nations that probably know more so than in oil and gas development. That's where you really need those structures set up and that there's been quite a bit of success. The Pathways piece is more complicated because people are linking pipelines to it and we don't exactly know what exactly the future development of oilsands mines are. There's different ways of looking at that. How much market access do you really need when. But we know we need to reduce emissions. So, Pathways has come out with, I think, a sensible idea on how to go about doing that. And I see that as a project of national interest.

It is something that almost like building a railway, you are going to have to decarbonize regardless of where we're going, regardless of what government’s in place over a generation. And that's a generational project. So, I do think they deserve support. I do think that it has an ability to be a major piece of a decarbonization equation. And then there's a lot of detail that sits under that.

00:36:11 - 00:36:28

Lance Mortlock

Do you think a crude oil pipeline, another one, will get built to the West Coast? I mean, BC's come out and said, no way. The First Nations have come out in particular affected areas and said,  we're not at the table. Are these negotiation tactics, or...?

00:36:29 – 00:37:44

Tristan Goodman

So, I probably start actually with, when you're looking at market access, particularly on oil, LNG and natural gas is a bit easier. But on oil, you probably want to know first what your market is 30 to 40 years from now. In other words, where are you going to sell this stuff? And you would want to make sure, and India is going to be a major factor in that equation, probably. Just, actually, our heavy oil fits well into the Indian refining complex. So, it's actually a good mix there. All right. So, if we've got that box checked then you need to look at what we have in place. And you can check that box from a reserve standpoint. We can grow almost indefinitely. Perfect. And then you have to look at what investors want to do. And that will answer are we going to build another pipeline or not?

We also need to look at debottlenecking. And there's different people that will say different things here. Our estimates are you can debottleneck across Canada to about an additional 600 to 700,000 per day. That's a fair amount of oil. You can do that over ten years and you're probably in a much more reasonable price than building a new pipeline.

Yeah. Question is, is it enough?

00:37:45 – 00:37:50

Lance Mortlock

I've heard on Trans Mountain there's potentially an additional 400,000 through additional pump stations.

00:37:51 – 00:39:15

Tristan Goodman

And to be fair, BC has actually been quite supportive of looking at dredging and other opportunities. Yeah. So, the final point, though, is what happens though when you get into the 2030s? And there's certainly ways you could see based on the market that we will need another pipeline if you wish to continue to grow.

And I think what [Alberta] Premier Smith is saying is, this is an Alberta resource that benefits the entire country and we do wish to continue to grow. Well, she owns the resource. So, I can appreciate why she's examining pipelines. So, I don't know if you're going to build one, but I do think you would over time. We have a good resource here.

So, it's a matter of how do we economically build that? Where does the pipeline go? We've got different ways to put it. Northern BC is certainly one. Maybe we look into an existing route that is already moving into Burnaby, maybe we move into the US. That's more challenging because you keep flipping back and forth between Democrat and Republican and one cancels your line. So, even if it makes sense to go to the US, you're probably going to have trouble going there. And then there's always the discussion of energy used. And to be frank, in one sense it makes a lot of sense because India is a market, it would also free us up for security reasons in eastern Canada. But that is an expensive line.

00:39:16 - 00:39:17

Lance Mortlock

That's a big line.

00:39:18 – 00:39:22

Tristan Goodman

That is a economic challenge by any definition. So different people think different things.
00:39:23 – 00:39:45

Lance Mortlock

When you say economically, there's a benefit, which I get from a provincial and a federal perspective. But one of the arguments that, and I might have this wrong Tristan, correct me from a BC perspective is,  , the royalties really go to the province of Alberta for a crude oil pipeline. What about is there a better way to negotiate a deal with BC to say, look, some of those royalties go to BC so that they've got skin in the game?

00:39:46 – 00:40:49

Tristan Goodman

I can't comment specifically on the royalties, but I can comment, you are going to have to have some sort of consideration of British Columbia if a new oil pipeline is built.

I can appreciate why that is. And I don't think that's being discounted actually by Alberta or the federal government. I think what the feds are saying is we're not opposed to this. If you can meet certain conditions, over to you, Alberta and you're going to have to work with those Indigenous nations that could be impacted, but also the BC government.

Now, you also have another argument that always comes from Alberta. An access point is a federal decision. So, you can't land lock or trap resources in this country. The Confederation and our federal system allows for access. It's one of the reasons federal ports are federal ports and not provincial ports.

00:40:50 - 00:40:55

Lance Mortlock

And I guess time will tell whether the feds will step up and say, hey, that's our jurisdiction, not yours.

00:40:56 – 00:40:59

Tristan Goodman

That's right. We'll see where that goes.

00:41:00 – 00:41:16

Tristan Goodman

So, there's a lot I do think there's when you get into 2035, 2036, there certainly arguments where you could start running into problems with market access for oil.

It just depends on how quickly you think that's going to grow and where companies…

00:41:17 – 00:41:22

Lance Mortlock

Well, right now the producers are saying there's no plans to double production.

00:41:23 – 00:41:51

Tristan Goodman

Yeah. Publicly, the producers are always looking at growth opportunities. They have to do that in consideration of where their investors want to go. As things improve, investors may change.

So, I like aspirational ambitions, aspirational goals. They're healthy for people to set, both in your personal life, but also from a country perspective. And I think that's what Alberta is trying to do.

00:41:52 – 00:42:37

Lance Mortlock

So that's a great segue to my last question before we conclude. So given everything that we've discussed, the energy sector in Canada might be heading towards more favourable times.

I would say personally, Tristan, I remain cautiously optimistic. New energy developments require capital. You talked about investor confidence to bring those projects to life. So, what does Canada need to do to capitalize on the available opportunities and be, if you like, more competitive on the global stage? Because at the end of the day, capital moves. So, what's your view at sort of that macro, how we show up as a country on the global stage to say, hey, we're open for business, bring your money here.

00:42:38 - 00:44:45

Tristan Goodman

So, I think to be fair to governments, they are starting with one of them, which is you need tactical regulatory reform that is going to, as a cumulative total, reduce the cost of developing these resources. The regulatory bathtub is just overflowing and you have got to go in and make some of this stuff more reasonable. And there has been some good movements from provinces, all provinces actually, that are, that have these resources as well as the federal government to do that.

So that's the first one. That will not be enough. The other two that are absolutely critical will be you are going to need eventually more substantive reform. You need to move in and set up entire new systems. C69 the Impact Assessment Act and other components of how federal regulation is occurring is simply inefficient, not effective and there are much cheaper, better ways to go about getting positive outcomes across those policy values that you're trying to get at. The final one, and it's surprising and it's sort of people don't think about this. Some of it is simply narrative. So, you can feel the narrative. I think everybody can feel a very positive narrative coming from the federal government related to natural gas development and LNG. And I believe they are serious about that narrative. I think Mr. Hodgson and the Prime Minister have done a good job on that front.

That narrative is not as strong when it comes to oil. There is some skepticism there. There can't be any wiggle room. There can't be any Canadian fence sitting. You need to pick a side of a fence and you need to move forward. It doesn't mean you have to abandon other values, but you need to be clear we are going to do this. Energy superpower.

What does that mean? Seems like a wiggle word to me. Investors don't invest when there's wiggling. They need perfect clarity. They need to hear it consistently every time.

00:44:46 – 00:44:59

Lance Mortlock

So that brings us to the last question. Any additional thoughts or insights you'd like to share to our listeners? in a wrap up, any key messages Tristan?

00:45:00 - 00:46:01

Tristan Goodman

I mean, I guess what I would say to, you know, everybody involved, it is possible, and we have demonstrated this as a country multiple times, to develop natural resources in this country, while protecting those key Canadian values. And in many ways, when you're developing those natural resources, you're actually enhancing some of those values that are not connected with the resource.

It's about a strong economy, but no one should consider that a movement completely away from environmental considerations or through the legitimate complaints of Indigenous communities. We are not always going to agree across this country on all these pieces, but it is possible to balance all of those components. And we've done it in the past, in the 1960s and 1970s, moving into the ’80s. We need to get back to that. And that will take bold leadership. We're starting to see it, but it's not sufficient yet.

00:46:02 – 00:46:05

Lance Mortlock

Never waste a good crisis. We're in this crisis moment in terms of the relationship with the US and let's not waste it.

00:46:06 – 00:46:57

Tristan Goodman

 Yeah. And also, it's not even just the relationship with the US.

It's always nice for Canadians that have jobs and are moving forward and doing well. There are a lot of Canadians here that are being hurt and they're being left behind and they're having to make very difficult decisions on basic issues: food, rent. That can be fixed with development. That's the key. You need to link one part to the other part that we all value.

That upsets me as a person that I see my fellow citizens unable to walk into a grocery store and purchase the basics that they need. It's not legitimate. It's not fair. That's where I think natural resource development, particularly oil and gas and energy development, can come into play. We need to link those more strongly together.

00:46:58 – 00:46:59

Lance Mortlock

Thank you for your time and insights, Tristan. We appreciate it as always.

00:47:00 - 00:47:03

Tristan Goodman

Thanks very much. It’s always nice to see you, Lance.

00:47:04 – 00:48:35

Lance Mortlock

So, for our listeners, we encourage you to reflect on today's discussion with Tristan and share your thoughts with us. You can reach out to EY via the attached contact details and join the conversation on social media. Finishing another great episode! I would like to share three final messages with our listeners.

I think firstly, industry associations like EPAC help align voices. Given our conversation today, I can firmly reiterate that organizations like EPAC and others play a crucial role in advocating for the energy sector and raising industry awareness amongst Canadians. Secondly, the energy conversation seems to be shifting. The dialogue around energy transition in Canada is evolving towards a more balanced approach that considers energy affordability, security and of course, environmental sustainability, reflecting a growing recognition of the complexities involved.

I think the new federal budget MOU, the Major Projects Office and a short list of major projects are steps in the right direction. And finally, feeling positive about the challenges that are ahead. While there is a sense of optimism about the future of the Canadian energy industry, there is still significant work to be done to ensure that the sector thrives, remains sustainable and contributes to economic resilience.

As we said, with Tristan, the devil's in the detail. Once again, thank you for joining our podcast and we'll see you on the next episode.