The global energy industry is poised for the perfect storm — but the Calgary university professor who is forecasting the turbulence says this province will continue to reap benefits from its offshore oil.
If it’s done right, that is.
Dr. Harrie Vredenburg says the trick with resource industries is developing expertise you can export worldwide — not just the resources.
Just as the Norwegians brought their expertise to the province’s offshore oil industry, Vredenburg said Newfoundlanders can export their own expertise to the rest of the world.
“I see places like Alberta developing expertise in heavy oil. There’s a lot of heavy oil around the world that’s not being produced right now.
“The expertise that Alberta develops should be able to be exported — not as a resource, but as skilled people with the expertise to do the engineering and management.
“I would see the same thing for Newfoundland and Labrador in the areas of offshore oil … and the same with hydro.”
Vredenburg is in St. John’s to give a free public lecture on the topic: The New Age of Energy Turbulence and Innovation. It’s scheduled for 7 p.m. tonight at Memorial University’s engineering faculty building.
He said the energy industry is just beginning to feel the effects of a trio of global trends:
• Increased global energy demand, especially from new economic powerhouses, such as China, India and Brazil.
• Declining energy supplies, particularly in the oil industry.
• And climate change policies by governments.
Vredenburg said developing countries are doing just that — and their own middle classes are buying plenty of products, such as household appliances and cars.
“At the same time, the populations in these parts of the world are still very, very large and they’re still growing.
“When you put together population growth and increasing economic wealth … there’s an increased demand for energy.”
As demand increases, so does the price, making other types of energy more economical. Eventually, people start looking for cheaper substitutes.
“You can switch from having oil heating in eastern North America and switch over to hydroelectric heating, and ship off that oil, because you’re getting a higher price selling it to China or India.
“That’s why I argue that, ultimately, there’s an increase in demand for all forms of primary energy.”
Oil is the most versatile fuel.
“You can do pretty much anything with it and you can move it around the world.”
For years, the industry has been turning to sources of oil which are more difficult to develop.
“The easier stuff is gone.
“Offshore makes a lot of sense now, with the high prices of oil, because we’ve got relative global shortages. It’s why the oil sands in Alberta are being developed.
“Which means there are continued opportunities for places like Newfoundland and for Alberta.”
Another opportunity is hydroelectric power, including the proposed Lower Churchill development.
“I don’t think that demand for hydro power is going to be going away.
“Increasingly, places like the U.S. will be looking to ship anything they can ship and get stuff they can get locally — and locally meaning North American-based.”
Vredenburg said climate change can also drive the development of new technologies that make, for instance, the oil industry safer and more environmentally friendly. Climate change policies may also favour some fuels over others, such as liquefied natural gas over coal.
“People can argue about whether you believe or you don’t believe climate change is happening, or whether it’s man-made or not.
“But the reality is that public policy-makers pretty much the world over are moving forward on some sort of climate-change policies pretty much everywhere.”
Vredenburg holds the Suncor Energy chair in competitive strategy and sustainable development at the University of Calgary’s Haskayne School of Business.
Haskayne, which specializes in energy management, is among the top business schools in the world.
It works with Massachusetts-based Cambridge Energy Research Associates, a company co-founded by Daniel Yergin author of “The Prize: The Epic Quest for Oil, Money and Power,” a best-selling history of the oil industry.