Good afternoon, Mr. Chair and committee members.
I appreciate the opportunity to speak with you today on behalf of Shell Canada, as a representative of our country’s most critical energy sector and as a proud Canadian who, like you, is extremely concerned about the impacts of a dual crisis, the likes of which we have never seen.
COVID-19 and the global market collapse are putting an extraordinary strain on Canada’s economy and specifically Canada’s energy sector. I am concerned, but I must tell you I’m also optimistic that, with the right motivation and constructive efforts, Canada will navigate these very tough days and one day emerge even stronger.
This period of crisis has deep implications for our sector and, of course, the entire Canadian economy. At Shell, our abiding priority is care for our employees and our customers, focusing first on business-critical activities that stretch from oil and gas production through to our chemical plants, refinery operations and distribution network, and right to our customer front line in retail. Our focus is on how we can keep people safe, how we ensure they practise physical distancing as they do their work and how we serve our customers through all of this.
A second key factor for us is business continuity and how we maintain those essential services we provide for Canadians. We’re dealing with what has been a huge destruction of demand. As an integrated business, Shell is managing to balance our operations around that new reality, while keeping people safe.
Our third priority is cash preservation, which is a common theme for our sector, as you're hearing today. The collapse of prices and demand has been dramatic. Like many others, we have been forced to cut back our capital programs and look at an immediate reduction in operating costs. We have cut our dividend by two-thirds and eliminated all bonuses in 2020, which is up to half of executive pay. We are looking at our supply chains and other costs in our business, and we’re doing everything we can in the near term to get those under control, while preserving jobs.
Shell is fortunate, as an integrated business, to be able to leverage other revenue sources. However, for small upstream mostly oil-producing players in our sector, the reality is grim. Liquidity is a key concern. How can they get enough credit to ride through this, maintain jobs and even be there for a recovery? What is needed now is more investment and more opportunity to help those smaller companies bridge. I have been in the industry for a long time, and it really is an ecosystem that thrives on small, nimble producers on the edge of innovation, and larger-scale companies, like Shell, that can de-risk and scale up technologies and support and build on those smaller companies’ developments. We need a healthy ecosystem from end to end, and that's something the current crisis is really threatening.
I am encouraged by the swift action of governments to deal with the crisis and provide immediate relief to displaced workers, to families and to the variety of sectors in society that have had to cope with these dramatic surges in unemployment. I see opportunity to think longer term as well, around how infrastructure and technology investments can support the sector, sustain our valuable resources, explore renewable energy in the mix and achieve our longer-term goals toward net-zero carbon emissions.
Indeed, there is significant and growing debate about the extent to which our economic recovery should be green. Let me say it would be a grave mistake to engage such an important conversation in an environment of polarization, partisanship and without sound evidence as the basis for Canada’s approach.
Shell is focused on our part of the energy and climate change challenge. We have made a huge commitment in terms of reducing our emissions to net-zero by 2050, and we have invested billions of dollars into what we call “new energies”, which include renewable fuels, renewable power and other technology, to help get us there. Heightened awareness of climate change for Shell is a good thing. At the same time, energy transition is a decades-long challenge that acknowledges we’ll need oil and gas in the medium term. We need it in Canada, and we need it globally. It is important that we keep driving down the carbon footprint of that production as we move forward.
Coming out of this, Canada must invest in innovation to help the energy sector accelerate our great track record of reducing emissions. At the same time, for Shell and across our portfolio, it is an opportune time to keep investing in clean energy infrastructure, helping to create the right conditions for more investment in biofuels, renewable power, hydrogen, carbon capture, nature-based solutions and other areas that Shell has dramatically stepped into.
Times like these reveal the true character and ingenuity of individuals and society. They demand a new level of unity, of meaningful co-operation and of care for each other. This moment has already shown us the best of Canadians, a real coming together that builds resilience. People feel that support. They feel it from governments, they feel it from friends and family, and it is clear they are not trying to play games for personal, corporate or political gain.
This is about working together as best we can—as companies, as people, as first nations, as communities, as governments—to do the right thing. If we focus on that level of collaboration, I'm convinced we can move far more quickly to make Canada stronger, more sustainable and more prosperous for all Canadians. It's an opportunity to not fall back, if you will, into the old ways, but rather to build on the momentum of co-operation that we'll need in the many challenging years ahead.
Thank you. I'd be pleased to take any questions