Thread by @ArjunNMurti

1 of 11/ Energy security and the case for Canada.

The world is better off with a healthy and growing Canadian oil and gas industry. #FreeCanadianOilandGas

arjunmurti.substack.com/p/energy-secur…

2/ The tragic events in Ukraine are an unfortunate reminder that a singular focus on climate ideology contributes to energy insecurity, un-affordability, and potentially un-availability while making the world less safe and less economically and environmentally healthy.

3/ If the world is serious about its over-arching challenge which is to eliminate remaining global poverty, provide a rising standard of living for all, while minimizing climate and environmental externalities, Canadian oil and gas will need to be part of the solution.

4/ Remarkably, USA + Canada contributed a net 87% of total oil supply growth over the past decade (2010-2019 to avoid potential COVID distortions). US shale was the overwhelming driver, but, notably, Canada grew at twice the rate of Russia.

5/ At time of war and energy crisis, a “Marshall Plan” for USA/Canada to displace geopolitically unfriendly countries hardly seems out of the question and, I believe, could garner investment community support.

6/ Russia exports 7+ million b/d of oil. At the avg growth rate from USA + Canada over past decade, Russia would be offset in 5.5 years. If we narrow to Russian oil exports to the EU/USA (mostly EU) it would take just 2.0-2.5 years. This is a goal we should look to achieve.

7/ Benefits of Canadian oil (1):
- Canada is a democratic, friendly country that I don’t think has ever invaded another country.
- Canada respects western values, such as freedom and liberty.
- Canada respects gender equality and the right to live openly with whomever you desire.

8/ Benefits of Canada (2):
- Canada is a dependable exporter.
- Canada has a massive oil sands resource that rivals Saudi/Venz in size.
- Oil sands are long-lived w/ modest maint. CAPEX post significant upfront spending.
- Canadian companies generate competitive ROCE/FCF.

9/ Cons:
- When combusted, Canadian oil produces about 25% more CO2 than alternative crude oils like Russia.
- Greenfield Canadian oil sands projects are often found at the higher end of the global cost curve.

10/ When including combustion, Canadian oil is higher than alternatives. But with absolute levels of CO2 not materially different from a big picture standpoint, IMO the inherent carbon content of Canadian crude oil is not a disqualifier vis-a-vis alternatives such as Russia.

11 END/ Furthermore, Canadian Oils are taking steps to address the cons:
- Canada has a price on carbon.
- Canadian oils are investing in low-carbon projects.
- Canadian oils have announced a CCUS hub.