US depends on Canadian oil, despite Trump’s comments, Cenovus CEO says

The U.S. relies on Canadian oil imports, despite comments to the contrary by U.S. President Donald Trump, the CEO of Cenovus Energy told the Global Energy Conference in Calgary on Tuesday.

Trump has threatened on-again, off-again tariffs on Canada’s oil, of which nearly 4 million barrels per day are exported to the United States. Canada is the world’s fourth-largest oil producer, and fifth-largest natural gas producer.

Trump has previously said the U.S. does not need to import goods, including oil and gas, from Canada.

Prime Minister Mark Carney, who won a minority government in April on a wave of anti-Trump voter sentiment, has said the country’s old relationship with the U.S. based on steadily increasing economic integration is over.

Jon McKenzie, who heads oil sands company Cenovus and chairs the Canadian Association of Petroleum Producers industry group, said trade tensions between the two nations have highlighted the need for Canada to diversify its exports.

But he said that need does not take away from the fact the two countries’ energy systems are inextricably linked.

“What hasn’t changed is energy economics and energy physics,” said McKenzie.  “The reality is we are hardwired into the U.S. system.”

Canada depends on U.S. refiners to buy the vast majority of its exported oil, while landlocked U.S. refineries in the Midwest are configured to process the grade of crude that Canada produces.

McKenzie said Canada has the opportunity to grow its oil output in the coming decades, and added the country’s new government needs to recognize Canada’s co-dependence with the U.S. and seek to improve that relationship.

“We need to make sure that we don’t act viscerally when we’re threatened, and that we act intelligently in our long-term interest,” he said.

As part of its response to the U.S. tariff threat, Carney has pledged to identify and fast-track projects of national interest aimed at helping Canada become what he calls a conventional and clean energy superpower.

McKenzie said the oil and gas sector does not want the federal government to pick winners and losers by deciding which projects to fast-track.

He said the industry instead wants to see broad regulatory reform that will remove barriers to investing in oil and gas projects.