Over the past decade, Canada has emerged as a global energy leader, due in large part to its growth as a reliable producer and exporter of oil and natural gas. This rapid rise has helped fuel economic growth throughout the country and reduce dependence on external energy suppliers, a fact not lost on three quarters of the Canadian people. But the broad public support Canada’s oil and gas industry currently enjoys has also meant that Canadian oil companies have not faced serious pressure to address long-standing social, fiscal and safety issues.
Canadian oil companies should take the steps necessary to address human rights violations, cost overruns for infrastructure projects and worker safety concerns now, because as international pressure to reduce emissions grows, they risk losing the generous public and government support they have long enjoyed.
With the recent election of Donald Trump and the Republican Party, the United States is not likely to take the lead on global emissions reduction, and Canada will likely be pressed to lead internationally on this issue. Ultimately, cleaning up problematic areas now will help Canadian energy companies deliver on their larger ambitions of profitability and sustainability and will help prepare Canada for global leadership.
For example, now that the Trans-Mountain Pipeline is complete and transporting oil to the West Coast, cost-overruns and long-term financial viability must be addressed. When Kinder Morgan first proposed the expansion line in 2013, it estimated the cost at $5.4 billion. Although the Canadian government bought the project from Kinder Morgan for just $4.5 billion in 2018, costs ballooned to $34 billion by May 2024. This is by far the most expensive infrastructure project in Canada’s history and taxpayers are not likely to recoup the costs until sometime in the next decade, if at all.
Shipping constraints at the Port of Vancouver and high tolls are deterring Canadian oil producers from using the pipeline, which is not yet operating at full capacity. And even at full capacity, profitability depends on an unusually high amount of spot purchases, or oil sales that aren’t contracted for in advance.
These deals are unreliable and may explain why the Canadian government wants to sell the pipeline. Right now, the pipeline’s financials and negative public opinion make it an unattractive investment. Instead of waiting it out, the Canada Development Investment Corporation should push to cut tolls for Canadian producers and improve the pipeline’s public image. If global oil demand does peak by 2035 (as some institutions forecast), then Canada needs to start recouping the cost of the pipeline now.
Suncor, Canada’s leading integrated energy company, should also act to improve its public image and its approach to safety and human rights. Between 2014 and 2022, Suncor experienced an alarming number of workplace deaths — more than all other oil sands companies combined. Since then, a new CEO has made strides toward overhauling the company (including eliminating 1,200 jobs), but more needs to be done while the company is outperforming market expectations.
For example, Suncor should resolve long-standing human rights concerns regarding its assets in Syria. Although Suncor suspended its operations in Syria in 2011, it still maintains ownership stakes in gas fields and gas facilities with the Syrian General Petroleum Corporation (GPC). It is suspected that human rights atrocities took place at one of these facilities following a battle between ISIS and the Syrian government in 2014 and civilian oil workers were mutilated and killed.
Later, the Russian mercenary group Wagner was contracted by the Syrian government to provide security to several oil and gas fields, including those partially owned by Suncor. Through a shell company, Evro Polis, Wagner is currently receiving 25 per cent of the proceeds from the production of oil and gas at the fields it protects.
Suncor should divest itself of all involvement in Syrian oil and gas assets. Even though the company has not been directly involved in operations there since 2011, any financial benefit (including write-offs) it may derive from association with the Syrian government or Russian mercenary groups is abhorrent.
Suncor should attempt to provide monetary compensation to the families of the oil workers killed during fighting at facilities it co-owned, and sell its Syrian assets as soon as possible so it cannot be accused of funding Russian mercenaries or benefitting from the Assad regime.
The Canadian oil industry will soon have to face the fact that it is responsible for a large portion of Canada’s carbon emissions. Starting in 2026, the Canadian oil industry will be subject to a cap on carbon emissions and will face the daunting task of decarbonizing operations to meet the new standards.
Canadian energy companies, like Suncor and the Trans-Mountain pipeline, would do well to start sorting out their financial, safety and human rights issues now, because if they don’t, they risk losing the confidence and support of the Canadian population just as they must make painful decisions to cut emissions.
Ellen Wald is a fellow at the Canadian Global Affairs Institute and president of Transversal Consulting, a global energy and geopolitics consultancy.
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