The Decibel - The pressure is on for Canada to meet growing energy demand

Episode Date: May 8, 2026

The war in Iran has radically changed the way that oil and gas moves around the globe. Since the war began, North American energy exports – such as petroleum and liquefied natural gas – have increased. Now, there is pressure on Canada to meet the increased demand. The Globe’s energy reporter, Emma Graney, is on the show to explain how some Canadian companies are changing course to try to meet that demand, what’s getting in the way for other Canadian companies to do the same and what all this means for a transition away from fossil fuels. Questions? Comments? Ideas? Email us at [e-mail] Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The war in Iran has radically changed the way that energy moves around the globe. And the pressure is on for Canada to rise to meet the increased demand. The head of the International Energy Agency is in Canada this week. And he says in order to meet that demand, Canada needs to get energy infrastructure projects moving fast. So today, we're talking to Emma Graney. She reports on energy for the globe. She's going to walk us through how the global scramble for oil. is playing out in Canada, what's getting in the way of Canadian companies being able to meet the

moment, and what this means for a transition away from fossil fuels. I'm Cheryl Sutherland, and this is the Decibel from the Globe and Mail. Hi, Emma, great to see you. Hey. So let's start with the shift in where the world is sourcing its oil. How has that changed since the Strait of Hormuz has been closed? Oh, it's been a massive shift. I mean, right now, Now there are some 1,600 vessels stuck in the Strait of Ombuds, and this is removed about 20% of global oil and gas supplies, right? So countries that really rely on fuel from the Middle East, and that's, you know, largely in the Asia-Pacific region, they're really scrambling to find alternate supplies.

So what we're seeing is this shift in vessel traffic and destinations and what's going where and where the ships are going, where they're coming from. So, you know, when we look to North America, the use. US actually became a net exporter in April for the first time since 1944. It hit record exports of 6.4 million barrels a day. So that's, you know, that's a massive increase in tanker traffic from the US. And then here in Canada, too, I mean, exports out of Vancouver increased by 60% in April compared with February, which was pre-war.

And that's according to shipping data firm from Vortexa. So essentially, a lot of countries are turning to North America. in a big way because we're reliable and we're relatively cheap as well. So we're seeing a huge, huge increase in traffic from here. Let's kind of dig into that. Where is the oil that's being exported from North America going? Yeah, so, I mean, the best way to look at this is compare pre-war February to April. So for the US in February, about, you know, 54% of crude exports went to Europe,

about 30% went to Asia, and the reminder went to the American. and Africa. But in April, half went to Asia and 40% went to Europe. I mean, that's a huge shift in terms of destinations. Now, here in Canada, the destination shift wasn't as dramatic. You know, about 80% went to Asia in April compared to 76% in February. It's because most of our oil was going to Asia already, right? That's kind of the idea here. Totally, yeah. And the difference is where in Asia the oil is going. So we're seeing a lot more cargoes to South Korea and to Singapore and also to China. So it's kind of, you know, we're seeing smaller shifts in terms of the countries of origin, whereas the US is just destination completely

changing. So it's been quite the overhaul. Right. Yeah. And what you're laying out here shows really starkly that it's Asia that's really filling the pinch and that's why most of the oil is going to Asia and different parts of Asia for Canada. Yeah, I was just actually down home in March and everyone was so worried about fuel supplies. Home being Australia. Home being Australia. Home being Australia, yeah, because, you know, Australia really relies heavily on Middle Eastern oil, just like a lot of Asia. And they were so worried and gas prices were just through the roof and people were worried that in fact we'd run out of fuel for airplanes and for diesel and for trucks and for everything. So there's been real concerns about where people are going to get their

oil from. And that's been all over the Asia Pacific region and other countries as well. Let's come back to Canada here because we've seen a 60% increase in exports and that's pretty significant. Is that putting a strain on the industry in Canada? So, I mean, it's interesting to look at the industry here, right? We had the Trans Mountain Pipeline expansion. I mean, that has certainly helped. You know, that boosted capacity from 300,000 to 890,000 barrels a day to the West Coast. And now that's been more than 90% full.

And Trans Mountain, just for context, it has both contracts, which are those long-term commitments that oil companies make and say, yeah, we're going to put this many barrels and we guarantee we're going to do it. But there's also something called spot capacity. So spot capacity is kind of like, well, it's like the oil company equivalent of busy restaurants that hold some space for walk-ins rather than booking every table. I like this analogy. That's very good. Well, you can understand it because right now, producers, they're really clamoring for that walk-in space, you know, they're going to the door going, yo, you've got any

tables, but in this case, it's spot capacity on the Trans Mountain Pipeline. So they're really filling up a lot. And we also send a lot of oil down to the United States, both to refineries, but we also send a lot down for exports from the United States Gulf Coast to different places around the world. So those lines are at all close to capacity now as well. Okay. So what we're laying out here is there's a real shift in the landscape. What kind of pressure is there on Canada, right now to adapt to that because you're kind of telling us that there is a bit of a strain happening here. So is there pressure on Canada to, I don't know, produce more or figure it out? I mean, there is. Now, put this in context. So nobody is saying that Canada is going to help the current

global energy crisis right now by ramping things up and let's get going. I mean, we are still hampered by how we can get our oil to market at the end of the day. But as you might expect, I mean, Alberta is really pushing here saying, look, this is why we need another pipeline to the West Coast. And we're also seeing pressure from outside as well, including the International Energy Agency. So the IEA is this Paris-based group, and it works with countries around the world to shape energy policies. So, you know, it's kind of a watchdog of sorts, I suppose, and it was behind the release of strategic oil reserves to help address the energy crisis a little while ago. Now, head of the International Energy Agency, Fatty Birol, he was in Ottawa this week, actually,

meeting with the Prime Minister and other ministers, and I spoke with him ahead of his visit. And his big push is to accelerate approval and constructions of energy infrastructure projects. He said, speed is Canada's number one problem. Now, this isn't just around oil and gas, which is, of course, where the crisis is right now. This is all energy. So this is critical minerals. It's the mining. It's the process.

it's nuclear power as well. So his point is that Canada needs to do better at being faster. What kind of weight does a comment like that, Kerry? I mean, it's not nothing, right? The IEA really watches and reports on all kind of energy, renewables, oil and gas, nuclear, geothermal policies, supplies. I mean, they have an astounding amount of data. And, you know, Dr. Beryl isn't always super candid in his comments, I would say.

But he was very clear when we spoke that Canada needs to do a better job of hurrying the heck up, getting stuff approved and getting stuff built. So speed might get us there faster, but what are the pitfalls of steamrolling through project approvals? It's a tight rope, isn't it? Because if you're really pushing through projects at high speed, you want to make sure that you're not dropping the ball on consultation. And you're not going, oh, you know what, we need it. So let's just do it now. and let's not listen to anybody and let's not consider the environmental problems here and the environmental impacts and the potential impacts to communities and First Nations and whoever else might be impacted by these projects. And I did when I spoke to Dr. Birole with the IEA,

when he said Canada needs to accelerate development, he did add, you know, this is a democracy, obviously. There are a lot of layers of government here, and this is not the IAA saying just disregard the rule of law and democracy, but it is the IA saying, just do it faster. We'll be right back. Let's talk about what expanding energy infrastructure looks like on the ground here in Canada. So in the backdrop of this is, of course, the Memorandum of Understanding or the MOU between Alberta and Ottawa,

which just to remind people, and this is kind of broad terms here, but it's an agreement to strengthen federal and provincial collaboration in the energy sector. Where do things stand there? Oh, yes, the MOU. It's always intriguing to know where things stand with the MOU. I mean, you hear things are going well, you hear maybe things aren't going well in negotiations. So essentially the two governments, you know, they've reached agreement on two of the four provisions in the MOU that was supposed to be finalized by April 1st.

So that's streamlining environmental impact assessments and the province cutting. methane emissions by 75% from 2014 levels. But there are two other really important objectives. And keep in mind, the MOU does contain an awful lot of other stuff. I'm just zooming in on this particular energy, on these energy objectives. So one of which is carbon pricing and another one is the carbon capture project in the oil sands. And they remain unsolved despite this April 1 deadline that was kind of put there. Now, the Prime Minister and Alberta say there's still working hard on a deal and maybe in the next few weeks we'll see one. But on the carbon pricing front, you know, sources told Ottawa reporter Stephanie Levitts and I this week that negotiations are

being kind of hampered by this disagreement over the speed at which the province has to increase its carbon price to $130 a ton, which is the number in the MOU because it's currently at $95 a ton. So there are still some delicate negotiations that are supposed to happen here. And then at the end the day, the idea is once Alberta and the federal government come to these agreements, it could potentially pave the way to a new pipeline to the West Coast. So we have to, you know, figure all this stuff out before we can consider a pipeline. Okay, so we're still quite a ways away from this pipeline. Oh, yeah, we're still a very ways away from this pipeline. I mean, no private companies come to the table and said, you know what, here's a plan, let's get her done, because pipeline projects have been known to fall apart.

in recent history. And they're also extremely expensive. I mean, Alberta is working to get a proposal on the table by kind of the summer. And then they hope that Ottawa declares it a project of national interest and then, wow, we'll see what happens then. But pipelines take a long time to build and they're not going to be helping with the current crisis at all. Speaking of pipelines, last week, Trump signed an order authorizing a new pipeline that would partly revive the route of the cancelled, the ghost of, Keystone. Excel. This pipeline would run from Alberta to the state of Wyoming. How does that factor into this push to expand Canada's energy infrastructure? Yeah, so just a bit of context. This is the bridge

of pipeline. So it would transport more than 500,000 barrels of oil a day from the Canadian border to Wyoming. So on the Canadian side, of course, you're going to have to get oil to the border. And on the Canadian side, as you say, it's this ghost of Keystone XL. So the pipework, would meet up with something called the Prairie Connector is what is being kind of, you know, considered up here in Canada by a company called Southbow. And in fact, Southbow has already been approaching ranches and farmers in southwest Saskatchewan to resurve a land that lies along the original Keystone Excel route. The question there is really how much crude Canadian companies want to send south, if at all, because when you've got this chatter around a new

pipeline from Alberta to the West Coast. And do companies want to lock themselves into this Prairie Connector into long-term commitments, long-term tolls that they're going to have to pay when potentially you have a line to the West Coast, it could get you more money, but that's not going to happen for a long time. So it's very much a wait and see game on what happens on the Prairie Connector with Southbow. And I will add that Southbow has an earnings call later on Friday morning. So I think this will be a big part of the discussions. It'll be really interesting to see where that goes because it will, of course, boost the amount of crude that Canada can get through down to the United States, which can go to refiners. It can also potentially go to the US Gulf Coast for exports. So that's another potential

option for producers in terms of boosting, you know, what they can get to market. So these projects we're talking about when we're talking about pipelines here, these are all ideas to be potential plans, to be potential pipelines. And Dr. Biro, who you were talking about earlier, has spoke with quite a bit of urgency right now to meet this moment. Is Canada doing that? I mean, that's kind of the goal of the federal government when they brought in this major projects office, right? They've said, we're going to make sure approvals happen quickly

within a couple of years. We're going to prioritize and hasten these projects of national interest. So that's what it's hoping to do. But, you know, it is a wait-and-see situation because we don't have any proposal on the table for a West Coast pipeline. Southbow and the Prairie Connector, I mean, that's, you know, they've put out a call for commitments on the pipeline already. That's kind of real. We do have expansions on an Embridge line called Embryge Main Line and that goes down to United States. That's a very real thing as well that is

happening. But yeah, at the end of the day, there isn't much Canada can do right now simply because of our constraints when it comes to getting product to market, that can really, you know, help with the current energy crisis. The idea is we need to boost these supplies if there's a crisis down the road and, you know, we're living in interesting times. So there probably will be that we can do all that we can to meet those global needs. And also just because, of course, we don't have a way to get oil from the west to the east in Canada. Exactly, yeah. And Dr. Beryl also made the point that Canada kind of has a responsibility here too, because Canada and North America as a whole, I mean, they're relatively stable jurisdictions, right?

We're not heading to a war that's going to have a U.S. Army blockade off of the West Coast of Canada. Probably not, or not at this point anyway. And, you know, we have a relatively low-cost product as well. So there are reasons that Canada is a very attractive, and North America is a very attractive market for different countries. Let's turn to the East Coast and the oil refineries there. I want to talk about one in particular, Irving Oil in New Brunswick, which is the biggest refinery in Canada.

What did their production look like before the war? Yeah, I mean, the Irving Refinery in New Brunswick is a really, really good example of how shipping routes and crude oil supplies have changed as a result of the energy crisis. So Irving Oil, this refinery in New Brunswick, it's the largest in Canada. it takes crew from other countries, turns into usable fuels as refineries do. Now, its feedstocks roughly 70% from the US, about 20% from Saudi Arabia, the rest from here and there and everywhere. So that's pre-war.

Now, Saudi Arabia is still getting about 5 million barrels a day into the global market via a pipeline and the Red Sea rather than through the straight. But that stuff is getting way pricier because, well, supply and demand. It's a thing that exists. So Irving is looking to alternatives. And hey-ho, there's oil being produced right next door off the coast of Newfoundland. So Irving's like, well, why don't we kind of go for that? The problem is getting the oil to New Brunswick.

And you would think it's right there. They're next door, basically. I mean... Yeah, explain that. What's going on? Yeah, it shouldn't be hard. The problem is there's a lack of vessels in Canada that can carry this stuff. And under Canadian maritime law, coastal trade is limited.

to Canadian flagged ships. So what Irving has done is applied to the Canada Transportation Agency for a waiver that would allow a foreign vessel to cart oil from the Wiffin Head Terminal in Newfoundland. Down we go, da, da, da, da, da, to the refinery in New Brunswick. And so it had to apply for this, you know, special license to be able to do that. And now, by the end of April, I did speak with shipping data phone Vortex about this. There hadn't been any ships, foreign flagged ships land at the refinery.

as of the end of April. But that's Irving's goal here is essentially make sure they have flexible supplies and they can get the refined product out. And in their application, they said to the government, well, if we can't do this, there's a real problem for energy security in Atlantic Canada. And so they made this big point that if we can't do this, we're going to be in big trouble and not just us as a company, but the region as a whole. You mentioned that there are a lack of of vessels here in Canada. Why is that? Well, we don't really kind of take oil, you know, within Canada. I mean, when you look at it, we're exporting from the West Coast. We're exporting from Newfoundland over to Europe or wherever the case may be. It's just not something that Canada

has a lot of. Okay. All right. And so let's talk a bit about this relationship between Newfoundland and New Brunswick. Why didn't they have a relationship before? Yeah, I mean, you would think, wouldn't you? Atlantic provinces, they get along so well. But yeah, I mean, you know what? Irving last got a shipment from Newfoundland in 2020. There were a few cargoes in 2016 and 2017. But mainly the crew that's produced off the shore of Newfoundland,

that goes to Europe. And the hope in Newfoundland is this relationship continues. Perhaps it boosts production from the offshore and perhaps down the road they can, you know, work together more close. because they're all in the Atlantic. So it just kind of makes sense. So I mean, we've been talking about projects with changes that in many cases are still a ways off from being realized, at least when we talk about pipelines, for sure, that's a ways off.

But you reported earlier this week on a Montreal refinery that is already making a shift. Tell me about what's going on with Suncor energy. Yeah, this is another really good example of how things have changed. So Suncor started refining jet fuel for the first time at its Montreal refinery in December. Now, when it started doing that, it thought, you know, we'll sell this stuff at local airports. Maybe we'll ship a little bit to Ottawa to the airport there. But then the war happened. So Suncor has pivoted to export.

Now, what's important to know here is Suncor has significantly boosted its trade relationships in recent years from roughly 20 countries to about 45. And that has come in clutch right now. You know, in March, it sent diesel and jet fuel to the Philippines. It sent it to Puerto Rico. And then jet fuel from the Montreal refinery specifically, it's gone to the Caribbean. And then last week, they got approval to send it to Europe. And so it's, you know, got its first cargo going into Rotterdam.

And Europe has some very unique requirements in terms of the quality of the jet fuel before they let you use it there. So it's been quite a market capture for Suncor to be able to get into this market and be like, oh, we've got the stuff you need. Look at that. I guess Montreal, how do I get it from somewhere else? But yeah, off they're going and they're selling it for more than they otherwise could have done. So for Suncor, it's been a real win.

So we've been talking about this move to produce more oil and the infrastructure around it. But what happens now with the energy transition, like this move away from fall. fuels. How are countries thinking about this shift in this moment? It is a really interesting question because this whole energy crisis has countries thinking a lot more about energy independence. And that can look a lot of different ways. That can look like countries going, okay, let's electrify our economy faster. Let's put renewables in so that we are not relying on other countries to give us, you know, the natural gas that we need to fire our plants or whatever the case may be. You might have countries as well looking to just use their

own fuels that they have. In some cases, and I did ask Dr. Biro from the International Energy Agency about this, about how you balance oil and gas, the crisis right now and what's happening in the world with this push to transitioning away from fossil fuels. And it's a really real. It's a really delicate balance. And he made the point that in some countries, it may not even look like renewables. Some countries might have massive stocks of coal and go back that way. But what is going to happen? And there have been a lot of really interesting analyses from various firms about this question of where countries go from here. Because they're seeing the problems. They're realizing just how much they're reliant on partners that aren't necessarily reliable.

And so the question is whether governments are going to not just be able, but be willing to make the hard decisions when it comes to energy policy. If you're looking to electrify your economy, for example, it's going to cost a lot of money. And you have to figure out how to do that in a way that you can continue getting the fuels you need to electrify your economy, whether it's natural gas, whether it's renewables, you know, solar, wind, whatever the case may be, do you go back to coal because it's just something that you have? have and something that's in your backyard. But there does seem to be a belief out there that this crisis is so big and it's so far reaching that it will really influence governments to make some hard choices. I mean, on the flip side, we're human, we have short memories and, you know, even after a crisis can go, well, that's over now. We'll just go back to getting the cheap Middle Eastern oil that we were getting because it's easy, whatever, off we go. But,

But that has to be balanced between, but what if this happens again? Or what if some other crisis happens again? Because people didn't think the straight-of-old moves would be closed. You know, and then when it did close, no one thought it was going to be closed for as long as it has been. So this is really coming home to Roos for a lot of countries. And they're going to make some very hard decisions. They're going to have to make some hard decisions. And, yeah, we'll see where that goes, whether it goes towards more electrification, more renewables into that mix,

which it likely will, according to the IEA, or whether we do see some countries go back to the dirtier fuels like coal. I mean, nuclear has a big opportunity here, and that's something that Dr. Beryl talked about as well, because it's low emitting, but that's expensive. That's hard to do. And so there's going to be hard decisions that have to be made here. Emma, it's always great to having you on the show.

Thank you so much. Thank you so much, Cheryl. Pleasure to be here. That was Emma Greenie, the Globe's Energy Reporter. That's it for today. I'm Cheryl Sutherland. Our associate producer and intern is Cynthia Jimenez. Our producers are Madeline White, Rachel Levy McLaughlin and Mikhail Stein. Our editor is David Crosby. Adrian Chung is our senior producer and Angela Pichenza is our executive editor. Thanks so much for listening.