Report says government policies hurting industry

Worried Alberta’s oilpatch is not recovering from the recent downturn as fast as other jurisdictions, a lobby group argues the province can attract a surge of new jobs and investment by streamlining regulations and fast-tracking approvals.

A new report by the Canadian Association of Petroleum Producers shows oil and gas companies have not ramped up capital spending in Alberta at the same pace as in the United States.

It argues this trend has affected plays across the province, especially the oilsands, where the industry group found 13 companies have diverted spending from northern Alberta to U.S. projects.

The report suggests oil and gas regulations by the Canadian and Alberta governments have helped reduce investment in the industry. It says new and ongoing rule changes will cost the industry up to $2.1 billion within six years.

“We have seen that trend of capital leaving Alberta over the past four or five years that I think can be tied very directly to a lack of competitiveness compared to the jurisdictions that are getting it,” said Tim McMillan, the industry group’s chief executive.

“We have seen other provinces bounce back quicker from the low prices. We have seen the U.S. ramping up very quickly and attracting investment capital.

“Anecdotally, we’re hearing it from the investment bankers that we’ve been dealing with for years, that Canada’s position today is very challenging compared to the other options they have.”

Alberta Energy said in a statement it has already taken steps to improve the industry’s competitiveness, including a revised royalty system it says rewards low-cost producers.

The NDP government had also asked the Canadian Association of Petroleum Producers for the report outlining ways to improve regulations, and will consider the findings.

“We’ll use CAPP’s regulatory information as a starting point,” the government said in a statement.

McMillan’s group has identified 31 regulatory and policy areas it believes can be improved or streamlined to make Alberta more attractive for oil and gas investment.

For example, the report says recent provincial legislation that overhauled labour rules could increase the industry’s costs by making it easier to unionize. It says approved and proposed changes to Alberta’s municipal tax system either will or could drive up bills for industry.

The oil and gas association behind the report wants the province to strike a steering committee, made up of senior government officials and the Alberta Energy Regulator, to identify and implement measures that would cut costs for industry while still meeting government objectives.

It’s also calling for a faster regulatory approvals process after finding that other Canadian provinces and some U.S. states approve certain well licence applications quicker than Alberta.

“We believe there is an urgency here and that there is a need to be very deliberate and very intentional to work toward these big outcomes as opposed to continuing down the path that we’ve been on,” McMillan said.

The Alberta government said in its statement that the group’s call for a steering committee “would displace the important work and thorough consultations that are underway or already complete.”

It said the province must also hear from those with a vested interest in industry, such as municipalities, Indigenous communities and environmental groups.

While the industry group is pushing for changes in government policies and regulations both federally and provincially, the report notes there are also wider, economic factors at play.

Advancements in technology have unlocked massive oil and gas reserves in the U.S., which means the country can supply a greater share of its own energy needs at lower costs.

Meanwhile, the report says the U.S. government has acted more aggressively to boost its oil and gas industry with support for liquefied natural gas exports and a presidential executive order to cut regulations.

The report calculates current and ongoing regulatory changes in Alberta, including the province’s climate change plan and Ottawa’s recovery strategy for caribou, will cost the oil and gas industry $450 million to $760 million a year in the near term.

These annual costs are estimated to reach up to $2.1 billion by 2023, once Alberta’s carbon tax applies to natural gas produced and consumed by conventional gas producers.

The report argues the federal and provincial governments could turn this around by implementing the industry group’s proposed changes to regulations and policies.

It says the measures could create thousands of jobs while generating $4.5 billion in gross domestic product and $200 million in additional income tax revenues.