In late October, UNB Law hosted UNB Talks: Trends in the Energy Sector at the Petroleum Club in Calgary, AB. This event brought together an influential group of University of New Brunswick and UNB Law alumni along with leaders from Calgary's legal, financial, and energy sectors to explore the evolving energy landscape in Canada and beyond. The Honourable Frank McKenna (LLB'74) and Kerry O'Reilly Wilks (LLB'01) delivered a powerful exchange on the legal and financing trends shaping the industry. Their perspectives on emerging challenges and innovations underscored the importance of forward-thinking approaches in one of the world’s most critical sectors. Below are some key highlights from their conversation.
Dean Marin: Do you see an opportunity for Canada to play a larger role in the global production of oil gas and hydrogen? What do you think it would take for Canada to realize that opportunity?
O'Reilly Wilks: The world is looking for reliable sources of energy. Canada has a wealth of natural resources, but it also has significant human capital. I think that there are significant investments that need to be made to get us to where we need to be. I'll hit on three pillars. If we think about it from a technology and infrastructure perspective, to state the obvious, we need to develop LG terminals; we need to build and expand pipelines. We need significant financial investments in hydrogen so that the technology can evolve to become a reliable substitute for baseload generation and its economics can reflect the technology evolution. Significant buildout needs to occur.
The next pillar I'd highlight would be regulatory certainty and stability. One thing that's critical—that we have to start to think about when we think about the interactions between nations—is that those interactions need to be based on a geopolitical perspective, not a tactical perspective. If not, we're always going to be on our back foot and we’re never going to succeed.
The last thing would be relationships. We need extremely strong diplomatic relationships and favorable trade agreements with importers of energy. Through smoothing those waters or bridging them, we will set ourselves up for success. But make no mistake, there's a lot to be done.
Dean Marin: It seems like we don’t have these discussions anymore as a country—the big constitutional discussions, the first ministers’ meetings—where they try to tackle a big issue together, cooperatively. How do we get back to doing this?
McKenna: I believe we can, and, in fact, I believe we must because this is not only robbing Canada of enormous economic wealth, it's tearing the country apart. We've got people in Quebec, particularly, who were adamantly opposed to an extraction industry without even knowing they've got two refineries there that are fueled by oil from Western Canada. We've got people in the West who, at times, don't realize that the Government of Canada—whether it's orphan well sites, pathways, or Trans Mountain—have actually done some important, positive work in getting energy to market, even though they don't take much credit for it.
We just need to get people in the same room talking and I think it's largely a function of personalities. I think if you had different people at different levels, you'd have different conversations. The Government of Canada is definitely a problem, but at the provincial level as well—sometimes not just leaders, it's followers, and we've got people who aren't talking to each other, which is highly unhealthy.
Dean Marin: Obviously, Canada's committed to reducing greenhouse gas emissions but at the same time, more and more energy is required to power the digital transformation that we're seeing with AI, etc. Is there a way to reconcile those competing objectives and how do you see that reconciliation taking place?
O'Reilly Wilks: The short answer is yes. If we take a step back, everything needs to be grounded in the three-legged stool: affordable, reliable, emissions. If one leg goes, it all collapses. I just finished an appointment with the Electricity Advisory Council through Minister Wilkinson. Our first recommendation was that the 2035 timeline…you can forget it. Look at 2050. Ground yourself on this. As a golden rule, one of the things I always try to do is boil it down to people, humans. We know that politicians largely care about getting elected and the associated votes that need to correspond with that. What this conversation has really evolved into is a crisis that was largely unseen or ignored and, to a certain extent, still is today. If we look across some of the grid operators throughout all of North America, they're predicting significant growth, and keep in mind they're only modeling it after GDP. That's their assumption—and a massive gap in generation. Let's think about, for the Albertans in the room, the January event where everybody had to turn down their heat and turn all the electricity off, so we didn't break the grid. Think about Texas. How many people died? If the wind's not blowing, and the sun's not shining, and the water is frozen, and it's minus 40, and it's illegal essentially to use natural gas, then guess what? Your voters die.
The reality check in terms of your initial question, that's not even modeling in assumptions on AI and data centers. I can’t keep up with the calls of massive hyperscalers wanting every bit of steel I have in the ground to power their data centres. If I ask Alexa to find a song for me versus doing something on ChatGPT, that uses ten times the amount of electricity that Alexa does. And none of these grid operators down into the US and across our country are modeling in those needs. So, the grids will absolutely break.
The solution is to allow the players to use all the tools and have an orderly transition. Conversations where natural gas is no longer a dirty word, it's an enabler, it's an energy transition fuel. Because guess what, the other renewables aren't baseload. It will break. Until technology and the associated economics evolve to a point where you can use them, such as hydrogen, such as the long duration biz, you need to continue to use natural gas as a tool. You can put CCS on it, or you can do a graduated scale of emissions caps, until we can finally get to the place where we can do it all. If you don't do that, the data centers and the AI providers are just going to go somewhere else. If I can’t provide that to the Metas and the Googles, guess what, they're going to set up a whole business unit where they're just going to self-supply. I lose out, the Canadians lose out, and some alternative jurisdiction reaps all the benefit.
Dean Marin: Frank, you're a big champion of digital transformation, you're the Benefactor of the McKenna Institute at UNB. Obviously, you see a lot of promise in this digital transformation. But how do we deal with the concerns that Kerry’s raising? She's proposing a solution through using the entire portfolio of energy generation. What are your thoughts?
McKenna: I am a big fan of technology and innovation in all forms. I think it's what brought us from the Malthusian era and the Luddite era to where we are today. I just note for the benefit of people in the room, Alberta is probably the world's leader in clean tech, and we don't talk about it much. We've got a thousand clean tech companies in Alberta. Alberta really exports more clean tech to the world than almost any other commodity. I think that's very impressive and that's something Canada should be bragging about.
Your question, I think, exposes a really current and looming issue that we have to deal with. There's a new data center in the world being built every three days. The amount of electricity the world requires is going to be doubled every three years. This doesn't get into artificial general intelligence, sentient intelligence, quantum computing, and so on, all of which suck up even more of that. The amount of data in the world itself gets doubled every two years, so it's just a tsunami that's coming at us and we have to deal with it. That sector of the economy requires clean energy. You won't get data centers, and so on, powered by anything other than clean energy. We just did a deal at Brookfield; we signed 10,000 megawatts of clean energy for Microsoft, and they're already negotiating for more. We just saw last week, both Google and Amazon do deals with nuclear providers as a possible source of clean energy. So, it's going to take everything in the portfolio from solar to wind to hydro to nuclear, which is going to have to be a big part of this mix going forward just for the clean energy.
But all of that's going to displace energy which is looking after heating people's homes and running factories and so on, and there will be no other alternative but for traditional energy to power those needs, which means oil and gas, etc… We just have to suck that up and understand it's going to happen, and if we don't provide it, they'll get it from Nigeria, they'll get it from Texas or someplace else. But, if we provide it, I'm hoping that through either carbon taxation at the industrial level and/or regulation, we will produce the cleanest natural gas and oil in the world. And if we do that, then I think that we've made quite a contribution.
To watch the full video of this insightful conversation, check out UNB Law’s YouTube channel. We would to thank our sponsors—Drysdale Law, Stikeman Elliott LLP, and Torys LLP—for making this event possible.
