Canada’s oil and gas sector can recover from the slump that has plagued it over the last year, says one expert, but it will take more than a little ingenuity and a firm commitment to regain the public’s trust.
David Hobbs, head of research at King Abdullah Petroleum Studies and Research Centre, joined host Tom Clark in The West Block this weekend to talk about Canada’s energy future.
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“What we can say for sure is that the Paris Agreement has set us on a path that is a lower-carbon future,” said Hobbs, who is considered an expert in the energy industry.
“We’re going to see natural gas, probably a lot less coal.”
The biggest challenge for Canadian oil producers, Hobbs said, is that their product will always be more expensive than the oil produced in Middle Eastern nations like Saudi Arabia.
Potentially adding to this challenge is a surprise agreement in principle earlier this week from the Organization of the Petroleum Exporting Countries (OPEC) to cut output by about 700,000 barrels per day.
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“If you are at the high end of the cost curve, it’s going to require ingenuity, innovation and just downright hard work to stay in that market,” Hobbs said. “It’s always going to be rocky if you’re not the low-cost producer.”
As solar and wind power become less costly and the government focuses on renewable energy sources in order to meet its carbon-reduction targets, Hobbs said big oil will need to “evolve,” becoming more environmentally conscious and making efforts to regain the trust of the populations it affects.
“The oil industry is right there with pharmaceutical companies and politicians in terms of public trust,” Hobbs noted.
“If it can’t police itself better to ensure it doesn’t get defined by the bad actors … then it’s going to be a long, hard haul to regain public trust.”
Watch the full interview above.