Eric Nuttall, LNG, pipelines

Eric Nuttall: Now is the time to unleash Canada's enormous resource potential

New pipelines are our “trump card,” and, if given the necessary urgency, they could be built in a matter of years, not decades

There are countries who have successfully leveraged their resource wealth to enrich their citizens, and then there is Canada.

Years of policies rooted in energy ignorance and centred around self-flagellation have made us poorer and vulnerable. From cancelling new pipelines that would have diversified our customer base and shrunk our price discount, to abjectly denying the business case in coal-replacing LNG, we have chosen the path of servitude again and again. As bearer of the third largest oil reserves in the world, it didn’t have to be this way.

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We live in a country where one in 10 people in our nation’s largest city rely on food banks to feed their families. We have “free” healthcare yet wait 10 hours to see a doctor in emergency rooms, with people dying after having left in frustration.

In Toronto, due to insufficient funding, it takes police 18.1 minutes on average to respond to the most urgent of 911 calls. Our streets are riddled with potholes, our subway breaks down with such regularity it is all but expected, and our schools are over capacity.

At what point do we as a country say enough is enough, and realize that unleashing our enormous resource potential is the solution to fixing all of this? How do we endure such unnecessary hardships while simultaneously strangling the lifeblood of our economy with pipeline cancellations and, perhaps most absurdly, a de facto oil production cap not being adopted by any other oil producing nation on the planet at a time when demand continues to hit record highs?

Trump’s proposed tariff on Canadian oil is a wakeup call for those who had been lulled into a false sense of complacency. We have for too long been overly reliant on a single customer for our energy, and this has put us in a position of weakness, resulting in artificially depressed prices for our oil. We can and are doing our part to lower overall emissions, yet eco-evangelism has clouded our judgement and has prevented us from maximizing our resource potential.

Today, despite the cancellation of two major oil pipelines, five greenfield oil sand projects and seven liquefied natural gas projects, the oil and gas sector is expected to generate roughly $40 billion in royalties and taxes, shared by all provinces and territories in confederation, while directly and indirectly employing more than 450,000 Canadian and making up 15 per cent of Canada’s GDP. Imagine what could have been under a more pragmatic approach.

Canada is a critical component to the United States’ “energy independence.” We account for just over 60 per cent of their net oil imports, as each day they produce 13.3 million barrels of oil and consume 20.5 million. Their production is a light oil, and is not well suited for the majority of the U.S. refinery complex which was built to process Canadian heavy oil, never with the thought of not having access to the U.S.’s safest, most reliable and cheapest source of oil. How will refineries around the Chicago area that import three million barrels of oil per day to be turned into higher-value gasoline and diesel possibly replace our pipeline-connected oil at scale? With barges and trucks?

Canada’s oil production is strategic to the United States today and increasingly going forward, as U.S. shale has entered its “twilight” and in 2024 grew at one of its slowest rates since its inception. Non-OPEC production growth, which includes both Canada and the U.S., is forecast to be in long-term decline, and we believe that under the Trump Administration, U.S. shale production will actually peak.

This makes Canadian oil incredibly valuable, as, given several decades’ worth of inventory, we will remain one of the few non-OPEC producers able to grow production for many years to come, supplying U.S. refineries at a time when their alternative sources of supply fall.

So, what is the solution to increasing our standard of living while ensuring that we are never, ever threatened like this again? The answer is simple: build more oil pipelines. Diversifying our customer base to allow Canada to increasingly circumvent the United States would mean that we would not be at the willful mercy of our southern neighbour, purchaser of roughly 97 per cent of our oil currently. We need access to the west coast to sell more of our oil into an energy-thirsty Asia, and a pipeline to the east coast to supply Canadian refineries with domestic feedstock, while also more affordably accessing other markets.

New pipelines are our “trump card,” and, if given the necessary urgency, they could be built in a matter of years, not decades. We should also fast track the several proposed LNG facilities on the west coast that have the ability to generate meaningful taxes and royalties while also helping to lower global emissions.

Canada could be an energy superpower, given we are blessed with the world’s third largest reserves of uranium, third largest oil reserves, and massive natural gas deposits in the Montney, Duvernay, and Deep Basin areas. No other country would have taken these for granted like we have, and anyone who has travelled to the Middle East will know how transformational the proper development of energy resources can be.

We have the opportunity right now to unite as a country and realize our full resource potential, which would literally lift millions of our citizens out of poverty. If we squander this crisis, the blame will not be on our trading partner to the south. We will have done it to ourselves.

Eric Nuttall is a partner and senior portfolio manager at Ninepoint Partners. 

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