Canada’s top oil and natural gas companies on Monday launched a national appeal for the federal and provincial governments to respond to tax cuts and deregulation in the United States.
“While the U.S. remains Canada’s biggest customer, it has also become our biggest competitor as it exports a significant amount of oil and natural gas to the same emerging markets Canada is seeking to serve,” according to the campaign by the Canadian Association of Petroleum Producers (CAPP).
The industry trade association makes envious comparisons to American industry conditions, especially since the election of President Trump, in a glossy first 12-pager of four planned campaign brochures.
CAPP president Tim McMillan, a former Saskatchewan energy minister, trekked to Ottawa to launch the crusade for recognition of potential industry benefits, titled “A global vision for the future of Canadian oil and natural gas.”
The opening salvo of the campaign portrays a sharp contrast between U.S. success and Canadian failure at recovering from erosion of oil and gas prices over the past decade.
“What took Canada 150 years to accomplish took the U.S. eight years,” CAPP noted. The Calgary-based group pointed to tepid Canadian growth compared to U.S. production increases of 77% in oil and 35% in gas during 2008-16.
The contrast between the two countries has also been stark on the investment front since before the Trump administration persuaded Congress to enact deep corporate tax cuts last year, said CAPP.
The association estimated that capital commitments to Canadian supply development languished at C$45 billion ($36 billion) in 2017, still down by 44% from C$88 billion ($70 billion) in 2014 before oil prices fell. “Meanwhile, capital spending in the U.S. rose about 38% to $120 billion,” noted CAPP.
Canadian oil and natural gas projects are at a disadvantage to those in the United States because of the comparative tax treatment of capital investment.
“This situation is getting worse,” said CAPP, pointing to the Trump tax reduction package.
“Our regulatory system is becoming increasingly inefficient,” said the group, recalling failed attempts to build pipelines to new Pacific and Atlantic tanker outlets for oil and liquefied natural gas (LNG) exports as well as delays suffered by surviving projects.
“There are up to 50 policy and regulatory initiatives currently being considered by provincial and federal governments that could undermine investor confidence,” it said.
“We operate in one of the world’s most stringent regulatory environments,” combining decades of provinces’ evolving supervision of their publicly owned or Crown resources plus new national climate change policies.
“It’s important that we have a robust regulatory framework that meets environmental goals, but not one that creates additional costs, delays and inefficiencies,” CAPP said. “In contrast, the U.S. is aggressively streamlining and reducing the costs associated with its regulations and eliminating unnecessary regulatory red tape.”
The industry group launched its campaign for breaks the day before the national Liberal government was scheduled to present its 2018-19 budget. No deep tax cuts or other quick results were expected.
CAPP plans to make 2018 a full year of campaigning public support for favorable industry conditions. The targets include a federal regulatory reform bill that is proposing to include new agencies and would expand project environmental reviews beyond effects on the air, water, land and wildlife into cultural “impact” realms such as aboriginal traditions and women’s rights and jobs.
“In order to ensure Canadian producers continue to attract investment we must balance our social and environmental goals with thoughtful policies that provide predictability and avoid unnecessary burdens,” said CAPP. “The competition is fierce and Canada needs to ensure it doesn’t fall behind.”