Oil and gas sector still essential, Trudeau says
OTTAWA — Canada’s oil patch is not dead, Prime Minister Justin Trudeau said Thursday as political pressure mounted on the government not to provide any further bailouts to the struggling sector.
Trudeau was speaking a day after Green parliamentary leader Elizabeth May and Bloc Québécois Leader Yves-François Blanchet both said post-COVID-19 economic investments should focus not on the oilsands of the past, but renewables of the future.
“Oil is dead,” May declared Wednesday during a news conference on Parliament Hill.
“I don’t share that assessment,” Trudeau said Thursday in his daily briefing to Canadians.
Rather, said the prime minister, recovering Canada’s economy in a way that ensures climate change goals are respected will require a healthy oil sector to develop and implement the innovations that will cut greenhouse gas emissions from their products.
“I know that if we are to move forward in transforming our economy toward lower emissions and cleaner processes, workers and innovators in Alberta and across the energy sector are going to be an essential part of that transformation,” he said.
Trudeau’s words were very welcome in the suffering oil patch, said Goldy Hyder, president of the Business Council of Canada.
“What is important was to hear the prime minister rather generously in his remarks acknowledge the sector is an essential part of this transformation,” said Hyder.
Hyder said the argument that oil is dead is simply “immature” rhetoric without any dose of reality.
The industry must figure out what it needs to do to help the government reach its climate change goals, he said.
But the capacity to innovate is not going to be there if the oil sector crumbles under the weight of COVID-19, Hyder said. He urged the government to bring in more credit for the industry.
“Don’t suffocate the very capital that leads to the very innovation that addresses climate change,” Hyder said.
Canada’s oil industry was hit in March by a double whammy — the plummeting demand for oil as billions of people around the world stayed home to avoid COVID-19, and an oil price war between Saudi Arabia and Russia that saw the two countries continue to pump out more and more oil.
The combination pushed world oil prices to record lows in some places, including Canada, where many producers already get less per barrel than others because it takes more effort to ship and refine some products from the oilsands.
As a result, Canadian oil producers are slashing capital spending, laying off workers, and cutting production by tens of thousands of barrels a day.
Major public companies are reporting multibillion-dollar losses for the first quarter. Ottawa announced a package of more than $2.7 billion in mid-April to properly remediate orphaned oil wells in Alberta and help companies curb their methane emissions.
Loans of up to $60 million were made available to mid-sized producers from the Export Development Bank and Business Development Bank of Canada.
But the industry wants more, with big producers wondering if they’ll get any help and some small producers uncertain they will be able to outlast the downturn intact.
Many environmental activists and some of Canada’s political parties say it’s time for Ottawa to turn off the cash tap and allow the industry to die out, in favour of greener, more renewable energies.
Alberta Premier Jason Kenney has asked for as much as $20 billion as a bailout package.