Framing the Canadian government’s goals for cutting greenhouse gas (GHG) emissions from fossil fuel production as too much, too soon, management at Cenovus Energy Inc. expressed doubts about how workable the system would be for natural gas and oil producers.

cenovus portfolio map

“I am very worried that if we remain on this path, it could lead to shutting in production at a time when the world is literally crying out for more oil and gas,” Cenovus’ president Alex Pourbaix told analysts Thursday while reviewing second-quarter earnings.

The Trudeau government has urged the oil and gas industry to cut GHG emissions 42% from 2019 levels by 2030

[Want today’s Henry Hub, Houston Ship Channel and Chicago Citygate prices? Check out NGI’s daily natural gas price snapshot now.]

Pourbaix said “those are much more aggressive goals than are being asked of any of the other industrial sectors in the country, including agriculture, heavy industry, and transportation…I think they’re going to be incredibly difficult. I don’t think they’re possible to hit.”

As an alternative to the government’s proposal, Cenovus and other Canadian producers have advanced the relatively modest Oil Sands Pathways to Net Zero initiative.

Pourbaix said the 30% oil and gas GHG reduction by 2030 target in the Pathways plan would “represent the best case that we could do if everything worked out really well and we were able to get investing in these carbon reduction strategies very quickly.”

Pursuing the government’s GHG targets, “what you’re going to see is that ultimately the risk could be a cut in production from Canada at a time when these resources are just incredibly desperately needed worldwide,” he said.

In its recap of recent company performance Cenovus reported 2Q2022 natural gas production of 882 MMcf/d, compared to 906 MMcf/d in 2Q2021. Combined oil and natural gas liquids (NGL) output for 2Q2022 was 614,200 b/d, nearly flat year/year from 614,900 b/d. Cenovus’ production mainstay, Alberta oilsands bitumen, hovered at 559,500 b/d during the first half of 2022, up from 530,800 b/d in the first half of 2021. 

Management also said that Canadian industrywide gas price gains contributed to an increase in operating costs at thermal oilsands production that use the fuel for underground extraction processes. 

The average oilsands extraction gas price for Cenovus, which reports in Canadian dollars (C$1.00 = US 78 cents), was $14.05/bbl in the first half of 2022.

Throughput from the company’s downstream operations in Canada and the United States averaged 457,000 b/d during 2Q2022.

Cenovus reported 2Q2022 revenues totaling $19.2 billion, up quarter/quarter from $16.2 billion.

Net earnings for 2Q2022 were $2.4 billion ($1.23/share), compared to $1.6 billion (81 cents) quarter/quarter and $224 million (11 cents) year/year.

Gordon Jaremko contributed to this story.