Notley confident investment in Alberta rebounding
Premier Rachel Notley says she’s confident investment is coming back to Alberta after the lean years of the recession, but a major oilpatch organization says there are still challenges.
Speaking at the annual Stampede investment forum Tuesday, Notley noted this year’s event had the largest turnout ever.
“When the price of oil dropped so significantly ... obviously international investors were a bit nervous,” she told reporters at McDougall Centre following her speech. “What we’re seeing now is a return of interest.”
With a plunge in oil prices that saw the benchmark WTI dip to US$27 a barrel, Alberta experienced two years of recession in 2015 and 2016.
The economy rebounded last year, with 4.9 per cent real GDP growth in 2017.
Oil is now around US$74 a barrel and the economy is expected to grow by 2.7 per cent this year.
But Alberta has faced an ongoing decline in capital investment since 2014, when total non-residential capital investment stood at more than $95 billion, mainly due to a decline in energy sector investment.
By way of comparison, last year’s capital investment figure was $57.1 billion.
In 2014, capital investment in mining, oil and gas was nearly $70 billion compared with $26.4 billion in 2017, according to government statistics.
The government said in February that it expected capital investment to drop a further 5.3 per cent in 2018 as “a result of the construction cycle of major oilsands developments completing.”
It also expected a decline in investment in conventional oil and construction this year, though it is forecasting significant investment growth in petroleum and coal products, chemicals and chemical products, and food and beverages.
Ben Brunnen, vice-president of oilsands and fiscal policy with the Canadian Association of Petroleum Producers, said it’s troubling that oil and gas investment internationally increased between 2016 and 2017 — and is expected to go up again in 2018 — even as it dropped in Alberta.
Fiscal factors such as carbon pricing in Canada make the country less competitive when it comes to attracting investment, especially when the Trump administration is cutting taxes in the United States, he said.
And concerns about Canadian regulatory climate, including the ability of provincial governments and protesters to stall projects, also affect investor confidence in the energy sector, said Brunnen.
While Notley deserves kudos for her advocacy of the Trans Mountain pipeline expansion, the ultimate solution — a federal takeover of Kinder Morgan’s Canadian assets to ensure the project moves forward — was not the most desirable option, he said.
“Put all these pieces together and Canada, particularly Alberta, have significant challenges,” he said.
But Notley told reporters that measures such as the NDP government’s climate plan ultimately serve to enhance the atmosphere for investment in Alberta.
“You come up with plans that make sense, that understand future pressures, that are based on the best practices ... so you know you have the best system that is going to stand the test of time,” she said.