Canada should look to Asia as gas-export market

Samir Brikho heads Amec PLC, a London, England-based engineering and consulting giant that, in its operating focus, is about as Canadian as oil sands and potash. Amec?s engineering services for oil sands and potash projects are a major factor in generating Canadian revenue of about $1.5-billion a year, and a Canadian work force of 7,000 (including 2,600 in Alberta).

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Mr. Brikho, 53, is a Lebanese-born, Swedish-trained engineer with a travel schedule that would crush lesser mortals. He landed in Calgary recently to talk about the changing U.S. energy landscape and what it means for price-challenged Canadian natural gas in 2012 and beyond.

Is Amec a Canadian or British company?

Thirty per cent of our worldwide revenues come out of Canada, so, in a way, we are both British and Canadian. In the past few years, we have transformed the company by concentrating on four markets ? oil and gas; metals and minerals; clean power technologies; environment and infrastructure, with water as the driver there. Despite our divestments [from construction and other non-core businesses], we have also been making a lot of investments in Canada. We are more profitable than average in Canada, and this is the only country in which we do everything [in all of Amec?s targeted sectors.]

You are heavily involved in the Alberta oil sands. Are you alarmed by the delay of the Keystone XL pipeline to the U.S. Gulf Coast?

Keystone XL has been a great opportunity for Canada to export its resources to the United States, but we have started to see a big change in the U.S. ? because of new energy technology, and how Americans are taking a different view from what their Canadian brothers would like to see. Was it right or wrong to [defer the decision on] the project? We will know perhaps in 30 years.

Where does this leave Canada?

Let?s talk about natural gas. All the exports of Canadian gas go to one country: the U.S. For four consecutive years, we have seen that gas production in Canada has been declining because of [shrinking] demand in the U.S. It?s because of shale-gas possibilities in that country. It is possible that the U.S. in 10 years will be totally self-sustaining and could be a net exporter of gas, rather than an importer. So for Canada, the game has changed.

If that?s the case, why this focus on gas?

Gas is interesting because it has abundant reserves; it is attractive from an environmental point of view. I?m not saying this is the best fuel we have, but it is definitely the cleanest compared with other fossil fuels. If we installed today a combined-cycle power plant [fired by natural gas], you would be having half the carbon emissions as in a coal-fired plant. So the U.S. can meet its own aspirations on emissions just by shifting [the balance in power generation]. In 15 years, it would not be impossible for the Americans to meet their high standards in terms of low emissions.

So what do we have to do in Canada?

We need to start looking at what is happening in Asia. The market is going to be Asia and no longer in the U.S. Take China, which is consuming 16.5 billion cubic metres of gas a year; the International Energy Agency anticipates it will consume 210 billion by the year 2035, about 13 times the current level. That presents us with an enormous opportunity.

And who are the suppliers of gas to China? Fifty per cent now comes from Australia and therefore Australia is building liquefied natural gas plants [with export capability]; in five years they will have 10 plants. Right now in Canada, we are building three plants. It is not going to be as big here as in Australia, but we still need to be in that game.

So gas is abundant, affordable and acceptable environmentally ? what I call the three As ? and they can put Canada back in the game, even all the discussion about the oil sands.

So Canada should be alert to the potential of gas even at today?s low prices?

In terms of the ?three As,? gas at the current stage ticks all the boxes, while oil sands at the moment is not ticking all the boxes ? I?m not writing off the oil sands by any means, because I think there will be a technological breakthrough where we will be able to improve our carbon and water footprint. The oil sands present a great opportunity still. And after what happened with Keystone XL, the energy agendas of Alberta and Ottawa are being aligned more than ever.

Source: http://www.theglobeandmail.com/report-on-business/careers/careers-leadership/at-the-top/canada-should-look-to-asia-as-gas-export-market/article2283437/?utm_medium=Feeds:%20RSS/Atom&utm_source=Globe%20Investor&utm_content=2283437

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