The U.S. is trying to achieve 'energy dominance.' What does that mean for Canada?
Ottawa and Alberta are hoping to attract energy investment, despite trade war
Speaking in front of thousands of energy executives and global political leaders gathered in Houston, the new U.S. energy secretary rhapsodized about the many conveniences of modern life that are powered by fossil fuels.
Airplanes. Air conditioning. Washing machines. Dryers. Television.
Going forward, said Chris Wright, the U.S. government isn't asking for people to make "sacrifices" in a bid to fight climate change. Instead, he said, it's entering a new era of "energy dominance," in which the United States ramps up energy production to bring cheap power to more Americans and to consumers around the world.
"We are unabashedly pursuing a policy of more American energy production and infrastructure, not less," Wright said on Monday, speaking at the CERAWeek by S&P Global conference, which has been described as the Super Bowl of energy.
"Our goal is to reindustrialize America, not deindustrialize America."
While Wright said he isn't opposed to clean power (he expressed a fondness for geothermal and nuclear, in particular), the key planks of the "energy dominance" plan involve ramping up production of oil, gas and critical minerals.
As U.S. President Donald Trump has put it: Drill, baby, drill.
At the same Texas event, the Canadian and Alberta governments are both visibly trying to attract investment with flashy displays. Even though Canada and the U.S. are in the midst of a destabilizing trade war, officials from north of the border are looking past it, in hopes of getting a piece of the energy pie.
"Co-operation is important," said Susan Harper, Canada's consul general in Dallas.
Harper is part of the federal government team hosting business meetings and a dinner in Houston this week to promote the opportunities to invest in Canada. Part of the message is about getting rid of tariffs, too.
"They are not good for Americans. They are not good for Canadians as well," she told CBC News.
Time to drill
In the U.S., the new administration is clear about wanting to boost the amount of oil and natural gas produced in the country in the name of energy security, jobs and affordability.
"The emphasis of the new Trump administration is incredibly different than the Biden administration," said Samantha Gross, director of the Energy Security and Climate Initiative at the Brookings Institution, a non-profit based in Washington, D.C. "They are laser focused on expanding fossil fuel development."
It's not yet clear what this plan will mean for the oil and gas industry. Companies like Exxon Mobil have said it's unlikely they'll change their production plans as a result.
Jim Burkhard, the global head of crude oil market research at S&P Global, said government priorities can only do so much to spur production. Ultimately, he said, companies make bets based on price — and oil prices, at this precise moment, have been down.
"Where we are right now, we're kind of on the low end of the investment range," Burkhard said. "We're not out of money ... but it is becoming a bit more cautious because of the price environment for oil."
One ally in the U.S. government's mission is Alberta Premier Danielle Smith, who attended the Houston conference and has ambitious plans of her own to ramp up the province's oil production. She's pitching the Trump administration on a vision that sees her province supplying the U.S. with the oil it needs to achieve its vision of "dominance."
Much of Alberta's oil is sent to refineries in the U.S. that are set up to process Canadian crude and have no easy substitution.
Trump has signalled interest in a new pipeline that would transport oil from Canada to the U.S. Still, that message has been muddled by the 10 per cent tariffs that the U.S. government has slapped on Canadian energy products.
Speaking to reporters on Monday, Smith dangled the carrot of potentially building a new pipeline — or several new pipelines — into the U.S., but only if they can drop the tariff conversation once and for all.
"There [are] a number of different pipeline projects that would allow us to increase the amount of oil coming to the United States, if they're interested in partnering with us," said Smith, who mused about routes that could involve the Port of Prince Rupert or James Bay, among other locations.
"I want to just put that on the table, but of course none of those conversations can begin in earnest while we're in the middle of a tariff fight."
Currently, no major oil pipeline companies have said they are actively pursuing new Canadian export pipelines.
Pumping more oil
Trump may want energy dominance, but it's unlikely he'll be able to increase production from the Permian Basin in Texas or the Bakken Formation in North Dakota, former Alberta energy minister Sonya Savage said in an interview with CBC News on the sidelines of the Houston conference.
"If he wants energy dominance, he's going to need Canada's supply," said Savage, who is now senior counsel with the law firm Borden Ladner Gervais LLP in its Calgary office.
Wright, the U.S. energy secretary, said at a news conference there are "active conversations" underway between the U.S., Canada and Mexico about how to move forward on the tariff file. Asked whether energy tariffs might be waived altogether next month, he said it's "certainly possible."
There's also some confusion about what percentage of Canadian energy products are subject to tariffs at all, following some tweaks to the policy last week. Pressed for specific information on numbers, Wright said he wanted to "avoid the details for now."
Alberta's premier told reporters she's not focusing solely on the U.S., and also plans to spend time in Houston pitching Alberta as a supplier to allies in Asia and Europe.
But as the neighbours to the south aim to embark on a new era of American exceptionalism, Smith is trying to hitch her wagon to their star.
"Alberta has a long-standing friendship with the U.S. people," Smith said. "We can get over the current tariff situation quickly and get back to building the North American energy security juggernaut."
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