Professor Xu Qinhua, the moderator (L) and guests talk at the panel discussion. From the 2nd in the left: Mr.Jason Ambrose from Palantir Solutions,Mr.David Bromley from David Bromley Engineering,Mr. Satvinder Flore from Amec Foster Wheeler, and Mr.Brian Humphreys from Nexen.(Photo provided to Ecns.cn)
(ECNS) -- Despite the dramatic drop in oil prices, some senior managers of leading Canadian energy enterprises still believe they can join hands with China and other markets to cope with the challenge through innovation in technology and operation.
This message was delivered at a panel discussion held at the Canadian embassy in Beijing on Wednesday, which brought together business leaders, analysts and scholars to exchange views on future market trends and opportunities.
The discussions are moderated by Professor Xu Qinhua, the Director of Renmin University's Center for International Energy and Environment Strategy Studies.Business leaders from four representative Canadian enterprises in the sector were invited to share their thoughts. They included Brian Humphreys, Vice President for External Relations at Canadian oil-sand producer Nexen; Jason Ambrose, founder of Palantir Solutions, a software and consulting company focused on oil and gas planning; David Bromley, CEO of David Bromley Engineering Ltd, a consulting firm majoring in industrial and municipal water treatment; and Satvinder Flore, Regional Market Director for Oil & Gas Canada at Amec Foster Wheeler, a solution provider for energy companies.
These representatives are on an annual trade mission organized by Nexen and its parent company, China National Offshore Oil Corp. (CNOOC). Around 26 Canadian companies and organizations - many small- and medium-sized - are spending a week in Beijing to promote Canadian capabilities and seek chances for cooperation in the country.
Canada and China have been partners in the energy sector covering both primary resources and renewable energy. At present, China is the third biggest export destination for Canada's oil, with a volume worth 148 million Canadian dollars in 2014.
Humphreys said the acquisition of Nexen by CNOOC itself has said a lot about China-Canadian energy cooperation. "We hope CNOOC and Nexen can serve to bridge two business communities and develop both economies for the benefit of both," he added.
As a Canadian industry leader, Nexen is also hoping to bring smaller but intelligent companies to the stage. According to Humphreys, their trade initiative is receiving good results so far, with about 60% of the companies having reached potential deals with Chinese partners.
The importance of the Asian and especially Chinese market has gained full acknowledgement from the Canadian energy industry, especially against the current backdrop of an oil price dip and other instabilities. The latest cycle of recession in the energy sector has seen global oil prices dropping by more than 70% since 2014, adding challenges to an industry already dealing with the impact of global warming and intense geo-political dynamics.
As the world's fifth largest oil producer, Canada is hit hard by the downturn, seeing halts on major projects and significant job cuts. Though it still maintains an output of 300,000 to 400,000 barrels per day, according to Ambrose, the number of its oil rigs has shrunk by about 30% compared to the pre-crisis level. Alberta, which holds more than 70% of the country's oil resources, is witnessing a "once-in-a-generation economic challenge" in the words of Provincial Finance Minister Joe Ceci. The regional government here expects energy investments to decline by 22% this year.
"This is a very unique time in our industry, with the largest drop in global capital spending in oil and gas since 1947. So we are seeing a major structural shift in the market and we're all forced to respond to it," said Flore.
There have been multiple theories to explain the cause of this round of price plunges. In this weekend,13 OPEC and non-OPEC oil-producing countries are also expected to meet in Doha, Qatar to discuss plans to freeze oil production. The upcoming talk, in Ambrose's view, won't have much concrete results, while Bromley thought the bet on reduction of supply may lead to a pickup in indexes for a while. Despite varied speculations around the meeting, guests believed the industry should focus on aspects that are within its control – that is efficiency and competitiveness.
"We can't do much to control the price," Ambrose said, "but we can do a lot to make better, longer term decisions." Adding that price fluctuation goes in cycles, he said that the industry had just got used to operate with a higher oil price for years, and that it is now time to relearn how to develop under low prices.
Canada's answer to this is to increase the role of technology and management. Citing their business of providing digitized models for energy projects, Flore said they are seeing oil companies getting more "asset focused" by engaging more scientific resources and technologies in planning and designing. There's also a shift from major projects to "smaller, sustaining capital projects" to allow swifter responses to market changes and enhance operative effectiveness. All these experiences and technologies, in Flore's opinion, can be referred to by China in developing a more tech-driven energy sector.
Through the mission, many delegates have also opened their eyes to the vast potential of future cooperation in China. The country is dealing with issues no different from that in other advanced oil-producing countries, as pointed out by Bromley, so that "we can test some of our technologies in China and collect valuable data." Flore said he and his colleagues were also amazed by the mature technologies adopted in oil sand drilling in western China and are eyeing probable opportunities to tap potential in this area. In summary, Humphreys said if both countries could add up to each other's supply chain, it would fully exploit know-how and expertise for the benefit of both.
For the long run, guests are optimistic about the future. They said growth of the world population and drives for development, especially in Asian countries, mean the demand for fossil energy will remain huge. The crisis, in the eyes of these Canadian entrepreneurs, is also a valuable chance for the industry to rethink its strategy and test out new technologies for more sustainable development.
The guests believed innovation would not only generate economic benefits, but also positive social and environmental impacts. Canada boasts a strict environmental monitoring regime on energy industry. Last month, the country also committed $50 million over two years to invest in technologies that would reduce greenhouse gas emissions from the oil and gas sector. "We never lack ideas, but we need to put them into concrete products," Flore said.
