CNRL supports carbon tax, if it funds new tech

CALGARY • The top executive at Canadian Natural Resources Ltd., one of Canada’s largest oil and gas producers, expressed measured support for a carbon pricing system in Alberta, as long as the program is used to fund new technology.

“We want a system that works well and that really does innovate, so that any charges you have actually go back into technology to reduce greenhouse gases,” CNRL president Steve Laut said in an interview Wednesday.

“If you’re serious about reducing greenhouse gases, we’re going to need technology to make that happen so that’s where we’d like to see that happen,” Laut said.

Carbon taxes have become a hot topic in Alberta since Suncor Energy Inc. president and CEO Steve Williams said last month that his company would support a carbon pricing system that applied to everyone, and that was implemented to ensure the energy industry remains competitive.

“We think climate change is happening,” Williams said, adding, “we think a broadbased carbon price is the right answer.”

Alberta’s current carbon pricing system, introduced by the long-ruling Progressive Conservatives, is set to expire this summer and the province’s newly elected NDP government is expected to introduce a new system.

At the same time, Premier Rachel Notley intends to increase corporate taxes from 10 to 12 per cent and conduct a review of what oil and gas producers pay in royalties to the government.

Asked what effect a carbon tax, a possible royalty hike and a bump in corporate taxes would have on CNRL, Laut said Notley understands “there are a significant number of jobs at stake” from the proposed changes. He also said that all jurisdictions need to compete for capital and that CNRL has significant assets outside Alberta.

“I will say this though, the conversations that we’ve had with the government to date as well as what they’ve said publicly has made us believe that the government will be pragmatic when they address these issues,” he said.

Laut added that the company had reduced greenhouse gas emissions at its Horizon oilsands mine by 18 per cent over the last two years and is spending $1.3 billion to capture CO2, reduce the size of its tailings ponds and is also reining in the company’s energy consumption at the project.

The company deferred an investor open house scheduled for Wednesday as a result of the “fiscal uncertainty” in Alberta.

CNRL hosted an investor conference call Wednesday instead, where it updated its production outlook for the second quarter.

CNRL now expects to produce 7,500 barrels of oil per day less than the originally estimated 513,000 and 540,000 barrels of oil per day this quarter, partly due to forest fires shutting down production from its Primrose oilsands project and planned maintenance at its Horizon oilsands mine.

During the conference call, CNRL executives also said previous oil and gas royalty reviews in Alberta in 2007 and the United Kingdom in 2011 resulted in a drop in royalties collected by the government and a drop in revenues for the industry.

Laut called those examples a “lose-lose situation” that he thinks the new provincial government will try to avoid.

We think a broad-based carbon price is the right answer

BEN NELMS / BLOOMBERG NEWS Oilsands producer Canadian Natural Resource Ltd. says revenues from a new Alberta carbon tax should go toward funding research into reducing greenhouse-gas emissions.