Validation in Canadian oilpatch as world focuses on energy security, abandons Russian crude

Amid sky-high oil prices and increasing sanctions on Russian energy around the globe, some in the Canadian oilpatch are noticing a change in attitude toward their industry.

The U.S. and U.K. are banning Russian oil and the European Union is moving to end its reliance on Russian natural gas, following the country's invasion of Ukraine. The U.S. was importing about 500,000 barrels per day of oil and other petroleum products from Russia.

Canadian energy leaders say they could immediately replace between one-third to one-half of those volumes and move the oil south of the border by pipeline and rail. And that's now a possibility with the U.S. looking for a steady supply of more oil to lower prices and replace Russian barrels.

"There is capacity for us to be able to move more crude into the U.S.," said Suncor chief executive Mark Little, in an interview.

Little is in Houston, Texas, at CERAWeek, one of the largest energy conferences in the world, and an event he's attended in the past.

"If you go back a couple of years, I would say the conversation about Canada's role with the United States on energy was almost non-existent," he said.

"And the engagement with the Canadian marketplace, I would say was very, very low. I think there's more of a recognition of just how important Canada is."

Oil from the Canadian oilsands is the "most demonized oil in the world," said Daniel Yergin, an author and vice-chair of S&P Global, on Tuesday, because it has traditionally been a high-cost and high-emitting source of energy.

Overall emissions from the oilsands continue to rise, although the amount of greenhouse gases per barrel of oil has decreased over the years.

"I am seeing a big change," said Cenovus CEO Alex Pourbaix, in an interview.

"The only thing that I'm gratified by out of this [conflict in Ukraine] is that I think, energy security is getting the level of scrutiny that I think it deserved for many years."

Canada was one of the first countries to announce a ban on Russian crude, although it hadn't imported any of the oil in a few years.

Up until recently, Russia has produced about 10 per cent of the world's oil supply. Economic sanctions, in addition to the direct sanctions on energy, are hampering the country's oil and natural gas exports. 

The impacts to Russian energy is potentially the biggest physical disruption to the energy market in history, said Aaron Brady, an executive director with S&P Global.