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Oilsands must diversify before electric vehicles bring new drop in oil demand, says Suncor CEO

The shift to electric vehicles and other low-carbon technologies could disrupt crude oil demand on a similar scale to the coronavirus pandemic, Suncor Energy Inc's chief executive said on Monday.

Pandemic gives 'glimpse into a not-too-distant future' of energy needs, says Mark Little

Suncor president and CEO Mark Little prepares to address the company's annual meeting in Calgary in May 2019. (Jeff McIntosh/The Canadian Press)

The shift to electric vehicles and other low-carbon technologies could disrupt crude oil demand on a similar scale to the coronavirus pandemic, Suncor Energy Inc's chief executive said on Monday.

The comments are a stark prediction in an industry that frequently downplays the impact of electrification and points to forecasts of rising global oil demand to justify new investment and pipeline expansions.

"While Canadian oil and gas will remain a significant part of the global energy mix for some time, we have to take advantage of new opportunities that offer attractive growth prospects," Suncor CEO Mark Little said in an opinion article for Canada's Corporate Knights magazine, jointly written by Alberta Innovates CEO Laura Kilcrease.

"The temporary economic lockdown triggered by the 2020 pandemic is giving us a glimpse into a not-too-distant future where the transformation of our energy system could disrupt demand on a similar scale."

Economic shutdowns to limit the outbreak's spread have ground travel to a halt, cutting fuel demand by about 30 per cent worldwide. Suncor, one of the five companies that produce more than half of Canada's crude oil, has curtailed output and cut its dividend by more than half.

Pivot to hydrogen, renewable jet fuel, carbon fibre

The sector also faces mounting pressure from investors for environmental reasons.

In May, Norway's $1-trillion wealth fund blacklisted Suncor and other large oilsands producers for producing excessive greenhouse gas emissions.

Canada is the world's fourth-largest oil producer, while the energy sector accounts for more than 10 per cent of the country's nominal gross domestic product.

Little called for federal investment to help the industry diversify into hydrogen, renewable jet fuel and carbon fibre.

Bitumen is rich in asphaltenes, the feedstock for carbon fibre, used for producing lighter vehicles including EVs, he said.

"If we can figure out how to do this affordably at scale, it has the potential to quadruple the revenue from Alberta's current bitumen output," he wrote.

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