Nine Themes to Watch in 2023

Subscribe: Spotify | iTunes

Peter and Jackie start the year off by introducing nine topics that are likely to dominate energy and climate discussions in 2023. 

1. China – Zero-COVID policy relaxation consequences 
2. Ukraine war outlook 
3. Inflation outlook 
4. Commodity price outlook – Which way? Up, down or both? 
5. Year of the EV pickup truck 
6. Canada’s response to the US IRA and other climate policy 
7. Green-on-green competition begins 
8. First FID on major CCS projects in Alberta 
9. LNG in Canada outlook 

Please review our disclaimer at: https://www.arcenergyinstitute.com/disclaimer/ 

Check us out on social media:    

X (Twitter): @arcenergyinst
LinkedIn: @ARC Energy Research Institute    

Subscribe to ARC Energy Ideas Podcast 
Apple Podcasts 
Google Podcasts 
Amazon Music 
Spotify    

Episode 183 transcript

Disclosure:

The information and opinions presented in this ARC Energy Ideas podcast are provided for informational purposes only and are subject to the disclaimer link in the show notes.

Announcer:

This is the ARC Energy Ideas podcast with Peter Tertzakian and Jackie Forrest. Exploring trends that influence the energy business.

Jackie Forrest:

Welcome to the ARC Energy Ideas podcast. I’m Jackie Forest.

Peter Tertzakian:

I’m Peter Tertzakian, and welcome back and happy 2023. Jackie, how were your holidays?

Jackie Forrest:

Oh, very relaxing. We were really in an island of calm and mild weather here in North America. Everywhere else it seemed to be crazy, so I was happy to be home and we had that warm weather, so it was great to get outside and did some skiing and cross country skiing. Yeah.

Peter Tertzakian:

Yeah, it was really great and I think you like us, were among those who did not travel and experience some of that chaos. Certainly the pre-Christmas chaos with the travel snarls, cancellations and so on.

So we typically don’t travel during Christmas because it is chaotic. Even with good weather, it’s often chaotic.

Jackie Forrest:

Yeah. And this year it was extremely so. Hopefully, I know some people are still trying to get back from their holiday breaks, so hopefully people are mostly back now and ready to go for 2023 and we are going to do something which is a little dangerous this year, I think is try to predict some themes.

And I say it’s dangerous because really a lot of uncertainty. I think as we look out over the next year in terms of how things will unfold.

Peter Tertzakian:

There are so many themes and so many themes that will probably emerge that will miss, but some things I think we can say there’s clarity on, and so why don’t we get started? I think the first theme, which is a near-term theme is the impact of the China zero-Covid policy relaxation, the consequences of that which we’re starting to see.

Well, I’m not sure we’re starting to see. I mean, there’s not a lot of transparency coming out of China, but no doubt this will have a huge impact on the economy potentially either way, if the relaxation goes well, then the economy starts to rev up, but there is a chance that pandemic and China gets worse and that has the potential to slow things down, at least temporarily.

Jackie Forrest:

It’s still just evolving, but I mean, the concerns are that because this virus is moving so quickly, it risks new variants and worst case scenario could have impacts beyond the border of China.

I know some of the countries including Canada are putting some restrictions on now, concerned by that, but yeah, that might also slow just generally the recovery of the Chinese economy. So what do you think is going to happen here, Peter?

Peter Tertzakian:

I think that there’s going to be volatility in the near term as headlines about what’s going on in China, ebb and flow with respect to the pandemic, but by mid-year I think it’ll be all over and that the demand side of the equation is going to be stronger and the poll is going to be stronger on energy commodities.

Jackie Forrest:

Yeah. No, I’d agree with you. I think accept lots of bumpiness and unexpected twists and turns in the first half of the year and the second half stronger. You know, this had to happen eventually.

You could argue it could have been done in a more organized way, maybe with more vaccinations in China and a less disruptive way, but eventually the Chinese economy had to open up.

It’s the second largest economy in the world and at the end of the day, that that is going to be positive for commodities at some point.

Peter Tertzakian:

Well, yeah, it’s easy to be an armchair critic of how it should have been done with 1.4 billion people, but it’s not easy. Anyway, it is what it is. But let’s move on to the next theme.

Jackie Forrest:

Okay. Another one that’s hard to predict: Ukraine war outlook. Believe it or not, February of 2022 is when it started. So coming up to almost a year and the ending does not seem obvious.

It seems like the Ukraine does not want to give up any land and Russia does not want to lose. So how do you think this is going to play out, and what do you think it means for energy?

Peter Tertzakian:

Well, I think the situation’s going to get more tense yet. I mean, even as we record this podcast today, the Western Alliance is pledging even more military equipment to the Ukrainians in the form of armored vehicles and air defense.

And so there’s a gradual ratcheting up between east and west and as we said in many of our podcasts, we are in a proxy war. We can’t be naive to that.

This is going to probably escalate into the spring when typically wars start to come out of their winter hibernation and get worse. So I think you’re going to see more tension that comes out of this, which will lead to more volatility in the markets, including the energy markets.

Jackie Forrest:

Right. Yeah, I mean if you assume a scenario that Ukraine continues to have support from the US and all those weapons and Putin continues to have support from the Russian people, then I could see this being a feature of 2023 and the energy war as well as the real war continued to be a part of what we have to deal with this year.

Peter Tertzakian:

Okay. So moving on to theme three, which is unavoidable inflation. So inflation was a dominant headline in 22 as a consequence of supply chain constraints following the pandemic and also the supply tightness of energy commodities as a consequence of the Ukrainian war.

So inflation was a big deal. We saw the US CPI, consumer price index, all categories rise in November 22. It was 7.1%. It actually peaked last year at 9.1%, which is still way far higher than the 2% target of most western central banks. So what do you think?

Jackie Forrest:

Oh, I would add as we’re recording this, there’s been news that over in Europe it’s also starting to come down. It peaked at 10.1% and it’s down to 9.2%

So this is still very high, although it’s better than it has been, it’s going in the right direction and I think most of the federal banks have signaled that they’re not done with the interest rate increases yet.

So I think we’re going to continue to see this be a very important policy for central bankers to increase interest rates. Maybe not as much as we saw last year, but they’re probably not done yet.

Peter Tertzakian:

Well, recognizing that the world’s economy needs energy, energy is the fundamental driver of costs because so much of the things that we consumed need mobility, need energy to produce food, etc. Energy costs are the thing to watch.

And also, an understanding of the way inflation is reported. Inflation is reported month-over-same-month. So the January number for this year will be measured over the January month of last year, and then the percentage is calculated February-over-February, March-over-March.

As we progress into the year, things will sort of flatten out because energy prices peaked, I think it was early summer.

Jackie Forrest:

More in the summer, yeah.

Peter Tertzakian:

Early summer. So by the time we get into summer, you’re going to probably start to see inflation numbers that have actually moderated substantially because it’s flat over flat.

I mean, not withstanding if we have another oil price spike or something like that by summer, but in the absence of that, I think you’re going to see those numbers start to ease and you’re going to start to see moderation in interest rate hikes and things like that.

Jackie Forrest:

Yeah, yeah, I hope so. I will add the China opening, that may help inflation because some of the issue with the supply chain last year has been because China kept shutting down plants and things like that, and so that’s another factor.

I think we’re going to go through some ups and downs here with China, but by the end of the year hopefully some of those supply chain issues will look a lot better and that will be positive to just solving some of the inflation issues as well.

Peter Tertzakian:

Okay. Well, let’s talk about those commodity prices and our outlook. So that would be theme number four. What do you think?

Jackie Forrest:

Well, last year commodity prices for oil had a real round trip. Started at $70, peaked above $120 near the summer and they’re in the mid-70s as we speak and it’s been very volatile start to the year, actually. Well, oil prices have really come down at the beginning of the year and gas too.

Have you watched what’s happened to gas at the beginning of the year? So we had gas prices in the summer at about $9 in North America at Henry Hub and they’re now under $4 so major slide for gas as well. So I’ll start maybe with my position.

I think oil’s a tough one to call. I mean, there’s a wide set of events here that could occur. If Chinese demand comes back roaring here and Russia’s supply is cut back significantly because of these sanctions, I think we could have quite high prices.

On the other hand, if there’s recession and slow economic growth and China doesn’t rebound very quickly and we don’t really lose a lot of Russian supply, prices could be where they are here or even lower potentially. So it’s really uncertain in terms of what the probability of each of those cases are, but I think each of them is possible

Peter Tertzakian:

On balance, I would say the bias actually is probably a little bit more pressure on the natural gas price. As I said, we’re coming out of a mild winter, I think, this year and more production coming out of North America probably in excess of the ability to export into the global markets.

So probably the gas side is going to be a weaker than the oil side this year, which is a flip from 2022.

Jackie Forrest:

Yeah, especially in North America. I mean, I think anything can happen over there in Europe, but I think in North America we had obviously a very cool December, especially around Christmas, but the outlook right now is for a very warm winter.

And if that actually comes to be, we’re going to have excess storage and we also got a bit higher production than people we’re anticipating. So I think we’re setting ourselves up potentially for a weaker gas market this year in North America.

Peter Tertzakian:

Right, right. Okay. So another, as if we didn’t have enough variables to think about, moves into our fifth theme, which is the year of the electric vehicle pickup truck and the adoption of electric vehicles continues. The opening up of more or the expansion of more models.

I mean, I don’t know, there’s probably 20 or 30 new models coming in, but several of those models are pickup trucks, which of course are the favorite of a certain a large segment of the population.

And so as we have the Ford Lightning, the GM equivalence and the Chevy Silverado, other models coming online, even Ram I think it was a few days ago, announced their electric vehicle at the CES show in Las Vegas. Looked like a pretty slick vehicle.

I don’t know when the Tesla pickup truck’s coming, but whatever it is, this I think is going to be the year where the adoption of electric vehicle pickup trucks is going to emerge. Now I also think it’s going to be a bit of a test to see if people buy them.

Jackie Forrest:

Well, and there’s long cues for them, but it doesn’t cost you very much to put your name in the queue. So it’s still a little uncertain how many people will buy them, especially as people are under more pressure with the higher cost of everything right now.

I think there’s a big part of the truck market that these don’t really meet the utility of what they’re looking for. I think that’s one question I have, and towing is a big issue for these trucks. I actually looked at a blog about this, but a Tesla Y owner was pulling a 2000 pound camping trailer and reported that they lost 50 to 60% of their range.

Peter Tertzakian:

Oh, yeah.

Jackie Forrest:

So some of these trucks will be able to haul things, but the range is going to be pretty short. And then if you do it in winter, you’re probably at a quarter of your range. So for those that want to haul, unless it’s short distances, always coming back to your home to charge, I think it’s going to be a bit problematic.

And then there’s just not a lot of infrastructure if you want to take these on the road, especially Western Canada. So I think that’ll be an issue here. But on the other side, there’s some real advantages. Ability to plug in your electric tools, keep your cab warm when you want to get a break from the cold.

I think that’s something people don’t appreciate with the electric vehicles. You could have them using the battery to keep the cab warm. And if you’re a outside worker and you can always just go in for some shelter and have a warm place to be without running the engine, like in a combustion engine vehicle, I think that’s a major advantage.

And of course the bidirectional charging, like the Ford 150 has. A lot of people have suffered from power outages and I think are going to be interested in that feature. So I think there’s going to be a market there. It just may not be the whole truck segment.

Peter Tertzakian:

Yeah. Yeah, there is. I’ve got a friend who just took delivery of a Ford F-150 Lightning and said the feature set is amazing and loves it, loves driving it.

However, it’s $100,000 plus vehicle and the issue of the load is an issue, but-

Jackie Forrest:

For a lot of truck drivers. Yeah.

Peter Tertzakian:

Compromising the range when you load it up with stuff is I think potentially a showstopper for those that want to pull RV trailers, etc. But there’s a certain segment that just likes a pickup truck for the occasional hauling of stuff and just like the space so on.

And for them, if you’re flush and can afford it and can get one, that’s the other issue, I think it’s going to be a game changer over time.

Jackie Forrest:

Well, okay, but I want to say that I really think that these trucks are not the solution to the climate issue. Just to give you, so Peter and I, we saw the EV Hummer last summer. We actually have some photos us with that, but this is just a ridiculously huge truck.

Just to put in perspective, the battery is about three times that of a Tesla or other smaller car, like 200 kilowatts, and the car is over 4,000 kilograms, which is about twice what a car would be.

And so the efficiency, like in terms of the amount of electricity it takes, it’s more than double what an EV car would take to go to the same distance. It’s no different than with gasoline that they’re inefficient and they take more gasoline.

Peter Tertzakian:

I’m not even sure it would be qualified as a light duty vehicle in some jurisdictions, 4,000 kilograms. I mean, that’s 8,800 pounds or something.

Jackie Forrest:

I mean, the Hummer is pretty extreme, but if we’re going to solve our climate issue, it’s not only about going electric in my view, it’s got to be using energy more wisely.

I mean, you had a book about that.

Peter Tertzakian:

Yeah.

Jackie Forrest:

The End of Energy Obesity.

Peter Tertzakian:

Energy obesity. Yeah.

Jackie Forrest:

I don’t think this is the year where we’ve reached it.

Peter Tertzakian:

No, no. I mean, I haven’t done the math how many solar panels you need to charge a 4,000 kilogram vehicle battery, but it’s a lot. Merely swapping big vehicles for even bigger vehicles is not a environmentally sound solution.

Jackie Forrest:

No, no. I mean, I think there’s a lot of utility to these, but I don’t think you’re doing it necessarily for the environment.

That said, people like their utility when it comes to vehicles and if it helps get adoption, I just don’t know that this is going to enable us to achieve all those net zero goals that everybody wants.

Peter Tertzakian:

Yeah. But I think we’re going to see some momentum behind these electric pickup trucks. I think it’s going to sort of influence in part sort of the perceptions about electric vehicles as it becomes more mainstream. And so, we’ll see where it goes.

Jackie Forrest:

All right. Well, theme six is Canada’s response to the US Inflation Reduction Act and other climate policy that’s coming down the pipe from Canada. As we learned in the fall budget, we’re going to hopefully get some details early this year in the spring budget about what our version of the I R A is going to look like.

And I know there’s been a lot of work going on. In fact, over Christmas there was a consultation for the clean hydrogen tax credit and the labor condition limits, and I expect there’ll be other consultations coming very soon this year on other aspects like that manufacturing incentive in Canada.

Peter Tertzakian:

Right. Well, the Inflation Reduction Act in the United States is so lucrative that it is actually siphoning Canadian dollars into the US whether it’s our institutional investment dollars or otherwise in corporate dollars. And that means that Canada is gradually funding the American net zero goals.

And so, we have to respond if we want to keep the dollars here and if Canada wants to achieve net zero. I think we are going to see the response to the US IRA, but I personally with skeptical that it’s going to be sufficient in its incentives to keep Canadian dollars here.

Jackie Forrest:

For all of them anyway, yeah. I mean, I think in some areas it’s going to be hard to compete. For example, they provide even better incentives for generators that use domestically produced solar panels for instance.

So, it’ll be tough for Canadian manufacturers to be in as in demand as maybe some of the products that are produced in the US, but I think in a lot of areas we can close the gap significantly and hopefully these consultations will help highlight what we need to do to achieve that.

I know one issue I have is up until now, we’ve only been talking about investment tax credits, but in the US, they offer in many cases production tax credits. So, like an incentive where you get paid for each unit of electricity that you generate over the next 10 years.

In many cases, that’s the more lucrative option. So, it’ll be interesting to see if we see a production tax credit for some of these areas come out eventually. I also think timing is an issue. It’s unrealistic to think that in the spring all the details are there. It takes time to draft legislation, to get that through.

So, I think probably it’s more like the end of the year or the fall before we maybe have full certainty on what we’re going to get in Canada. I did want to note too, there was obviously a lot of other things going on in policy this year to keep your eyes on, the Net-Zero Electricity Standard, which I think will help give a more clarity in terms of investment opportunity there.

We’ve got these rules for contract for differences to help firm up carbon pricing and hopefully get some investments going. Clean fuel regs are going to start in the middle of this year. So, there’s more. There’s just a lot of policy, I think, that was uncertain coming into more clarity at the end of the 2022, which hopefully will get real final rules on in 2023.

Peter Tertzakian:

So, some people say that the US Inflation Reduction Act is more carrots than sticks and the Canadian is more sticks than carrots. What do you think?

Jackie Forrest:

I think that’s true today. However, if we do this right, I think we’re going to have some sticks and a bunch of carrots, and I think we are going to see more investment in Canada as a result.

Peter Tertzakian:

Okay, so more carrots. I think we’re going into the next theme which will be interesting in 2023, which is increasing green-on-green competition. That’s what I call it because to this point the competition in the energy space has been let’s get off fossil fuels and onto green, doesn’t matter what kind of green.

I think we’re going to start to see discrimination now between green and in fact green on green competition for the jewels of energy that go from primary source to end use.

And so, this is going to be a shifting paradigm because any company that is championing solutions in the green clean energy space is now going to have to be conscious about competing for dollars, much scarcer dollars from private investment because of where the markets have gone.

They’re going to have to compete for those scarcer dollars against other green companies.

Jackie Forrest:

Yeah. I mean, I think it’s a big paradigm shift with the IRA. In the past, except for solar and wind, most green energy really didn’t have an economic case and the solar and wind had some tax incentives in the US that helped, but in it on its own, it had become economic.

However, now we’re entering an era that many green carbon systems with the tax credits and the things that they have going for them, they do have advantaged economics. And we’re going to start to see, like you say, investment go much broader, competing for capital, competing with each other as opposed to always just competing with your fossil fuel equivalent.

And I think it’s going to make it a much more unpredictable environment, I guess, in terms of who’s going to be the winners and losers and what ultimate technologies are going to be very large 10, 15 years from now.

Peter Tertzakian:

One of the big problems is that investors, now I’m talking about private capital, not the public IRA type of incentives, but the private capital is still skeptical. Of course, the markets have come off hard in the clean energy space.

They’re skeptical about investing in the various green landscape, be it hydrogen batteries, capacitors, biofuels, you name it. Because as you said, other than wind and solar farms, there isn’t a lot that makes money on its own.

Jackie Forrest:

Yeah, you definitely need the policy to make the economics work in many of these other areas.

Peter Tertzakian:

I mean, I think batteries have come of age for vehicles, but generally speaking, all these other areas require subsidization and there’s skepticism.

And so, there’s a bit of a jump ball that’s going to be occurring, as I said, this green-on-green competition for the scarcity private dollars, but also the more abundant public incentive in dollars.

There’s going to be a jump ball that goes on for that as well. And basically, those who can sell their projects the best are the ones that have the highest probability of gaining that capital and putting it to work.

Jackie Forrest:

Yeah. I mean, we’re entering an era where we’ve got money going into more early stage emerging areas because the economics work dependent on policy. But at the same time, I think it’s going to create more uncertainty in terms of those investments. They’re just higher risk.

Peter Tertzakian:

Right.

Jackie Forrest:

Yeah.

Peter Tertzakian:

Okay. What’s next?

Jackie Forrest:

All right, our next theme is number eight. We’re predicting the first final investment decision on carbon capture storage projects in Alberta will occur this year.

Peter Tertzakian:

Yeah. So, the context for this is one of the things holding back CCS investment in Alberta is that the province had not granted rights for storage of carbon. Understanding that carbon capturing the CO2 is one thing, but then you have to basically put it underground.

Put the carbon back in the ground in porosity in the geology. And that there are all sorts of rules and regulations about how to do that that had to be established and that that subsurface right to inject the carbon back into the ground requires leasing of those subsurface porosity and geology.

All that stuff has been put into place slowly. And so now with that in place, we would expect to see some of the early projects come to fruition or at least some shovels in the ground, would you say?

Jackie Forrest:

Yeah. I mean, for sure. Now we have some resolution, something like 26 projects have been awarded the rights to do this, but there are other barriers too. Like how can you make money doing this? And the concern was that, yes, we have a carbon price, but it’s volatile and you’re not certain what it’s going to look like in a few years.

And then there’s also some risk that it’s not politically stable. We have certain parties in Canada that don’t want to support a carbon tax. So I think budget had a fix for this, which was this contract for differences.

So, I think some of the pieces are coming into place, as I said, the Clean Fuel Standard, which is going to be important as well for some of the CCS projects. So I do think we are probably in the position where we’ll see one to two CCS projects, and maybe I’m wrong, maybe they’ll be more that get the final investment decision this year. And probably one to two hydrogen projects, which ultimately do use carbon capture as well.

Peter Tertzakian:

I think it’s important to expand for a moment on the economics of carbon because we have had speakers in the past on our podcast talking about that, but it’s good to refresh because the point that you made. Capturing and sequestering carbon is not really a profitable business in a free market sense on its own, that it does require an elevator price of carbon and a guarantee that that price is going to stay elevated or escalated to $170 a ton, for example, by the end of the decade.

Because in the absence of that guarantee of price, nobody will invest in these projects.

Jackie Forrest:

Yeah. I mean, you’re spending a bunch of energy and resources to store this CO2, and if you don’t get any money for doing that, you have no reason to do it. You would shut the plant down.

Peter Tertzakian:

Right. So, talk about the contract for differences, which is sort of a buzzword that’s emerged over the course of the last 12 months. Contract for differences, for our audience.

Jackie Forrest:

Well, it was mentioned in the fall economic update, and there wasn’t really many details given at all. But our understanding is that it would be an office would be set up and there would be one-off negotiations with each project to kind of figure out what is a floor for carbon price that would be needed to support their project, and that these would be private agreements that the government would make on a one-by-one basis.

My biggest concern with it is just the time it’s going to take to do all of these one-off agreements and is that going to slow things down because there’s only so much capacity to do that.

So, in theory, it sounds like it could solve the problem, which is create a floor so that the projects have a price that can provide a minimum return on investment when they can go forward with these investments. But this will be very critical just to, if we’re right here about, or if I’m right about these CCS and hydrogen projects moving forward, is some sort of floor on the carbon price.

Peter Tertzakian:

Right. So, the key word is contract, contract for differences. So the word contract means that the price of carbon is locked in between the government and the project because even though the federal government has mandated that the price of carbon will escalate to $170 per ton by the end of this decade in the event of political change, in other words changing government through the next election, which is before the end of the decade, that the next government may basically act that and say, no, it’s not going to be 170 or we’re going to get rid of it or whatever.

That does not give any comfort to a company that wants to spend billions of dollars on carbon capture and sequestration. A contract that’s put into place, is theoretically immutable.

In other words, it has to be honored and guarantees that carbon price rather than a much weaker guarantee that has just been provided by the government. Oh yeah, the price is going to be $170, but we don’t really know what’s going to happen.

Jackie Forrest:

Yes, exactly. And because the sum of this is done in offset markets, there could be a supply and demand changes in the market that bring that price down.

So basically, the contract for differences is that whatever the price of carbon is, we will pay the difference. You know, if it’s not at a certain floor that’s needed to get a minimum return for that project.

Peter Tertzakian:

Right. So, if the minimum return is achievable, say with $150 a tonne, but the actual price is $120, the difference is 30 bucks, which the government will backfill to keep that project supported. Right?

Jackie Forrest:

That’s it. I mean, we don’t know for sure, but that’s kind of the expectation of what it will look like.

Peter Tertzakian:

And that that they’ll be one-off contracts with each of these operators that expend the billions of dollars and that will give them the comfort to spend the money and for investors to come into the projects whether they’re from within Canada or from outside.

Jackie Forrest:

And I mean, the advantage of this one-off idea is that every project has a different threshold in terms of what price it needs. So that’s more efficient use of the government’s money to create a floor that’s unique for each project.

However, it’s bureaucratic, it takes time, all these. So that’s my biggest concern with it is how long it’s going to take. And I do feel like one project for CCS, one for hydrogen probably can occur, but I wonder how many, if this becomes a bottleneck.

Peter Tertzakian:

Right. Okay, next.

Jackie Forrest:

All right, next. And the final theme is LNG in Canada. So, as you all know, Europe needs to fill the void lost by Russian gas. They did take about 11 to 12 BCF per day from Russia into Europe in 2020 and 2021. To put that perspective, Canada produces about 18 BCF per day today.

So, it’s a substantial amount of gas that needs to be supplied by others into the future and we’ve seen a number of deals go forward. For example, deals forged between Europe and Qatar.

Just January 3^rd, we heard that Sempra has made a deal with Germany from their Port Arthur LNG project. We know the US is going to probably have more announcements this year. What’s the outlook for Canada?

Peter Tertzakian:

Well, I think the outlook for Canada is that the discussion about LNG will die down in my opinion. I don’t think the East Coast, like the SNET projects, are going to go ahead. I think maybe LNG Canada on the West Coast at some point may announce another train, but that’s about it.

There’s a few other projects that are in the works, but generally speaking, again, it’s going to be very hard to compete against what’s going on in the United States.

The Gulf Coast LNG projects, I think are going to gather further momentum, as you just said, and that Canadian gas, which is hooked up to a continental grid one, just make its way down to those LNG terminals in the United States and transit from there to foreign markets.

So again, we rely on the US as our agent to take our gas, liquefy it and sell it to others rather than do it ourselves.

Jackie Forrest:

Yeah, sadly I do agree with you. And for those that would like to learn more about that topic, remember we had Cheniere a major exporter of LNG out the Gulf Coast and ARC Resources who had made a supply agreement with Cheniere to provide Canadian gas to that facility.

I think that’s probably going to be the bulk of how we participate in the global LNG markets. Yes, LNG Canada, let’s hope we get second phase and there is a number of other smaller projects moving forward. I think those will happen, but I think the very large, large projects are probably going to be going to the US.

So, it’s a huge lost opportunity for Canada. Just as a reminder, that LNG Canada project alone was reported to be about a $40 billion total investment into our economy and people creating jobs, building the project, operating the project. We’re giving that up by not participating.

Peter Tertzakian:

Right. The other dynamic that I am sure we are going to spend time on in 2023 podcasts are things like the emission reduction cap, the targets for 2030, the upstream requirement to reduce emissions by 40% plus by 2030, even more in 2035.

That comes at a time when we are in need to grow the production to fulfill the pipeline exports and the-

Jackie Forrest:

Right. And to continue to supply into the US.

Hey, I did want to mention another important thing for 2023. Hopefully this time next year it’ll be a reality, but the Trans Mountain Pipeline will would be moving oil this time next year to Burnaby and shipping it off our West coast.

That should really help our crude oil price differentials that have really come under pressure recently. But the plan right now is as of the latest update that it would occur in the latter part of the fourth quarter of 2023 that pipe would be operating. So, let’s hope that that occurs this year as well.

Peter Tertzakian:

Well, it seems like it’s on the horizon. I mean, it’s been such a long saga. Maybe we’ll wait until second or third quarter before we talk about it because it just always takes twists and turns.

Jackie Forrest:

Well, as we get closer to that very important date, let’s talk about having a podcast. I know we’ve had Ian Anderson from Trans Mountain on a couple of times, but it’d be great to have Don Ferrell who’s now leading the charge for the Trans Mountain as we get closer to the startup of that very important piece of infrastructure.

Peter Tertzakian:

Well, we’ve covered a lot of ground, Jackie, on this list. I think there’s nine themes that we covered. There’s going to be plenty more, I’m sure as we record more podcasts into 2023. At this point, we’d like to, again, thank all of our listeners around the world.

We have many in many jurisdictions stretching from South America to the Middle East all the way into Southeast Asia, that we wish all of you a very Happy New Year and a prosperous and healthy one as well.

Jackie Forrest:

Yes, and thanks for following. If you enjoyed this podcast, please rate us on the app that you listen to and tell someone else about us.

Announcer:

For more ideas and insights, visit arcenergyinstitute.com.