Canada will boost oil and gas production to help Europe cut use of Russian energy

OTTAWA—Canada says it can produce more oil and gas to sell to European countries that want to cut their use of Russian energy as punishment for Moscow’s invasion of Ukraine.

Emerging from meetings with his European counterparts at the International Energy Agency (IEA) in Paris on Thursday, Natural Resources Minister Jonathan Wilkinson announced Canada can boost oil production this year by up to 200,000 barrels per day — less than five per cent of the amount of Russian oil European countries were consuming as of November 2021, according to the IEA.

Canada’s potential natural gas contribution is even smaller. Wilkinson said the country is only able to increase gas production this year by the equivalent of about 16,000 cubic meters per day. That’s a fraction of the 158 billion cubic meters of gas that the IEA says the European Union purchased from Russia last year.

Wilkinson acknowledged the new production represents a “relatively small proportion” of the Russian oil and gas Europe consumes, but noted the United States and other countries are also looking to boost production to help slash the cash flowing to Putin’s regime from European purchases of fossil fuels .

“Any additional amounts can help,” he said during a phone conference with reporters, adding that the government is also looking at initiatives to reduce consumption in Canada to free up more supplies for export.

Wilkinson said the bump in production would not alter Canada’s pledge to slash greenhouse gas emissions that cause climate change by at least 40 per cent over the next eight years, and argued the country has an obligation to sell more oil and gas to Europe to aid in Ukraine’s time of war.

As of 2019, Russia supplied the European Union (EU) with more than 40 per cent of its natural gas imports, and 27 per cent of their crude oil imports, according to EU data. The bloc of countries is debating how to wean off those supplies as Western countries tighten the vice on Putin’s regime through a host of economic sanctions — including bans on Russian oil from Canada and the US — over the invasion of Ukraine.

“It would be incredibly irresponsible for Canada to say, ‘we don’t care, we’re going to stick our fingers in our ears and pretend that crisis doesn’t exist,’” Wilkinson said Thursday.

In recent weeks, Wilkinson’s office has been speaking with the oil and gas industry — including a major fossil fuel lobby group and pipeline company — to figure out how much more Canada can crank out to help boost global supplies so European countries can buy less energy from Russia, the world’s third-largest oil producer.

Wilkinson said the federal government is working with the US to ensure the extra production flows through existing pipelines to increase the availability of oil and gas on the international market and allow Europe to replace some Russian energy with these boosted supplies.

He also said European allies have asked Canada about whether it will build new liquified natural gas export facilities. He noted there are proposals to build facilities on the east coast, where none currently exist, though the Liberal government would only want to approve projects that run on “ultralow” greenhouse gas emissions and can displace existing natural gas consumption so they don’t increase global emissions, Wilkinson said.

The EU’s current plan is to phase out Russian fossil fuels by 2027.

The situation also has political implications in Canada. Fossil fuel boosters like the federal Conservatives decry the lack of new pipelines and natural gas infrastructure constructed on the Liberal government’s watch, while environmentalists and left-wing parties argue the best plan is to redouble efforts to replace oil and gas with renewable energy that doesn’t t exacerbate the climate crisis.

Speaking in Ottawa Thursday morning, NDP Leader Jagmeet Singh said Europe’s predicament is further evidence that the world needs to shift to renewable energy.

“We absolutely need to double down on more investments in renewables,” he said. “That’s really the future for energy on our planet … and experts agree that’s where we need to go.”

The federal Conservatives say Canada instead needs to build more pipelines, including ones that would flow from Western Canada to the east to export fossil fuels to Europe. Greg McLean, a Conservative MP who is the party’s shadow minister for natural resources, said the government should also send signals to Canada’s fossil fuel sector that it will receive more support for boosting production during the crisis.

McLean said the government should commit to approving more infrastructure like pipelines and export terminals, and also ensure oil and gas companies get a generous tax credit for spending money on technology to offset their sizable emissions.

“We’ve got to start treating it as an important industry,” he said. “It is not just for Canada, but obviously as we now see, for the whole world.”