Carbon taxes divide oilpatch group
Over half a dozen companies leave CAPP over policies, pricey membership costs
Divisions within the Canadian oilpatch are coming into sharp relief as a number of midsized producers have quit the country’s largest industry association amid rifts over carbon tax policies and pricey membership.
More than half a dozen oil and gas companies have left the Calgary-based Canadian Association of Petroleum Producers and, in some cases, joined the smaller Explorers and Producers Association of Canada, or no longer have any affiliation with industry groups.
Crescent Point Energy Corp., Baytex Energy Corp., and Penn West Petroleum Ltd. confirmed they are no longer CAPP members. TORC Oil and Gas Ltd., Paramount Resources Ltd., Vermilion Energy Inc., Harvest Operations Corp. and PTTEP Canada Ltd. are no longer listed as CAPP members, but could not be reached for comment.
“As one of Canada’s top producers and most active operator over the last several years, we chose not to renew our membership with CAPP because we felt the association was not devoting a sufficient amount of time on conventional oil production, particularly in Saskatchewan,” Crescent Point president and CEO Scott Saxberg said in an email.
CAPP is the largest oil and gas industry association in Canada and lobbies various levels of governments on a range of issues facing the industry. It has publicly supported broad-based carbon pricing, which it believes will build support for pipelines, but not every member is on board with its strategy.
Calgary-based EPAC has a more nuanced policy on carbon tax as it believes that while the costs of carbon taxes on producers are certain, it’s still not clear whether carbon taxes will help producers move oil and gas on new pipelines.
Some companies that left CAPP were concerned the group is too focused on the oilsands, while others disagree with its support for carbon taxes, and still others say their business has shrunk during the oil price collapse to the point where CAPP’s membership fee is too expensive, according to sources.
“The splinters are showing,” Mount Royal University professor David Taras said, noting it would be difficult for politicians to duplicate the scene Alberta Premier Rachel Notley put together in announcing her package of climate change policies in 2015, which was publicly backed by executives of Suncor Energy Inc., Cenovus Energy Inc., Canadian Natural Resources Corp., and Shell Canada, despite differences of opinion within the wider industry.
A divided house would make it more difficult for the energy industry to communicate clearly with governments and the public. “The more noise you have in the environment takes away from your message,” Taras said.
Saxberg said Crescent Point and CAPP were not aligned on climate change policies in Saskatchewan.
“We believe a carbon tax in Saskatchewan is ineffective in reducing emissions. Rather, we support a more pragmatic emissions reduction framework that focuses on innovation and investment in technology,” he said.
Crescent Point supports Alberta’s climate plan, which includes a carbon tax, but each province has its own policies to support its citizens and industries, Saxberg said.
Given the oil price collapse that has now pushed crude below US$44 per barrel, some producers have chosen to forgo a CAPP membership as they seek to cut costs, a source at another producer said.
This year, CAPP is charging members a fee of $4.64 per barrel of oil equivalent they produce, up to a maximum of $3.1 million plus general sales tax. The minimum fee is $5,000.
A source said executives at some mid-sized firms met recently to discuss whether memberships were too expensive and more beneficial for oilsands producers than conventional ones. Some chose to leave. Major oilsands producers, and a number of smaller players in the heavy oil formation, remain members of CAPP.
CAPP has also gained some new members, and has lowered membership costs in recent years as companies remain under pressure from low oil prices, said president and CEO Tim McMillan. McMillan refuted claims that CAPP is too focused on the oilsands, and said the association divides its time and effort between oilsands, conventional production and offshore.