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Cenovus CEO warns that oil demand could begin to decline at $150 per barrel.

Alex Pourbaix, CEO of Cenovus Energy Inc. percent decrease, is hoping that oil does not reach $200 per barrel.

He believes that the fact that oil prices are currently hovering around $120 per barrel is bad enough for Canada’s energy sector. And if that price approaches $150, he believes demand will continue to fall.

Mr. Pourbaix made his remarks on Tuesday at the Global Energy Show in Calgary, the day after Goldman Sachs raised its forecast for the price of Brent oil (a global benchmark) to $135 per barrel in the first half of next year by $10.

The problem with oil and gas is that there is no switch that will instantly add five or six million barrels to fill a supply gap and help lower prices.

“It takes tens or hundreds of billions of dollars to make those investments, so I’m a little bit worried that it is going to take a while for the industry to respond to this,” Mr. Pourbaix said.

The Organization of Petroleum Exporting Countries and Allies, or OPEC+, agreed on Thursday to increase output by 648,000 barrels per day (bpd) in July and August, rather than the previously agreed-upon 432,000 bpd. However, this had little effect on price reductions.

“The experts tell me that as oil approaches $150 a barrel, you would start to see some demand destruction,” Mr. Pourbaix said.

“I think typically that shows up as people taking less vacations, people driving less and making those kinds of personal choices.”

While Mr. Pourbaix readily admits that he has no idea what consumption levels will be in the next 50 years, he believes that the Canadian oil sector’s decarbonization goals will position it well to supply the market as the world demands cleaner energy.

“What happened over the last several years is there was a lot of ambition that we could really move this transition along very fast. I think we’re finding out that this is a many, many decades transition and it’s probably going to look more like diversification than it is like transition.”

Canada’s largest oil sands producers have set a goal of achieving net-zero greenhouse-gas emissions by 2050. The first step is the construction of a pipeline system to transport carbon captured during oil production to a storage facility near Cold Lake in northern Alberta.

Mr. Pourbaix also anticipates a combination of longer-life wells, a greater emphasis on capturing fugitive methane emissions, and the implementation of carbon capture at large oil sands sites over the next 30 years.

Small modular nuclear reactors are another option.

“If we’re able to commercialize small modular reactors, you can see a scenario where you could completely decarbonize the upstream in Alberta,” he said.

While he believes that more work needs to be done with Ottawa on the regulatory front to make the system more predictable, he believes that cooperation on issues such as the carbon capture tax credit has been beneficial to the industry.

He’s also optimistic about pipeline availability, particularly now that Enbridge Line 3 is operational.

In conjunction with the anticipated completion of the contentious Trans Mountain pipeline expansion, which the federal government purchased in 2018, “we probably have a decade at least where pipelines are not going to be the issue they’ve been in the past.”

“For much of the past 15 years our industry has really been challenged by egress out of the province because of a lack of pipeline takeaway,” he said, but “that has been significantly improved upon.”