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Climate-related extreme weather puts oil and gas assets, production at risk
CTV
Suncor Energy Inc. filed a disclosure document last year laying out what would happen if extreme weather were to force a 10-day shutdown of its massive Base Plant oilsands mine in northern Alberta.
Suncor Energy Inc. filed a disclosure document last year laying out what would happen if extreme weather were to force a 10-day shutdown of its massive Base Plant oilsands mine in northern Alberta.
The document — which Suncor filed with CDP, a global non-profit that maintains a database on corporate environmental action and climate risk — details the financial risk to the company posed by such a scenario.
While the likelihood of extreme weather events remains "unknown," Suncor said in the document that a 10-day Base Plant shutdown could cost the company $56 million per day (more than half a billion dollars in total) in the form of lost revenue due to production losses.
When analysts talk about the oil and gas sector's exposure to climate change-related risk, they often come at it from a policy or demand forecast perspective. They look at the risk that climate change will prompt governments to impose more regulation on the fossil fuel sector, or that the energy transition will lead to a decline in demand for oil and gas.
But the oil and gas sector, like all industries, is also exposed to climate risk in a physical sense. That risk has been hammered home this month, as out-of-control wildfires in northern Alberta forced several Canadian oilsands companies to evacuate non-essential workers from their sites. Suncor itself, Canada's second-largest oilsands producer by volume, has temporarily curtailed production at its Firebag complex due to the fire danger.
Also this month, Hurricane Beryl forced the temporary shutdown of offshore oil platforms along the U.S. Gulf Coast, one of North America's most important regions for energy resources and infrastructure.
"Oil and gas infrastructure, like everything else, has been increasingly exposed to severe weather events fuelled increasingly by climate change," said Craig Stewart, vice-president of climate change with the Insurance Bureau of Canada.
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As the Earth sizzled through a summer with four of the hottest days ever measured, Vice-President Kamala Harris and former U.S. president Donald Trump have starkly different visions on how to address a changing climate while ensuring a reliable energy supply. But neither has provided many details on how they would get there.