Alex Pourbaix is president and CEO of Cenovus Energy. Tim McKay is president of Canadian Natural Resources Limited.
The clock is ticking down to Kinder Morgan’s decision about whether to proceed with the Trans Mountain expansion pipeline. Meanwhile, Canadian oil continues to trade at a discount with transportation bottlenecks that keep it from reaching new markets – even with global oil prices at a three-year high.
It should be clear now – if it wasn’t before – this is no longer about one pipeline, one industry or one province versus another. It’s about how we function as a country – a single economic unit operating within a global market.
We have world-leading environmental standards, but inefficient regulations and rising costs as a result of decisions made by multiple levels of government. Our inability to get major projects built is eroding global investor confidence in Canada.
Today, the Trans Mountain expansion pipeline still faces numerous roadblocks that are jeopardizing significant potential benefits for the entire country in the form of taxes, royalties, jobs and economic growth.
The Canadian Energy Research Institute estimates the western Canadian oil industry will contribute about $1.5-trillion in provincial and federal taxes, as well as provincial royalties that will benefit all Canadians over the next 20 years. We can expect this contribution to increase with construction of the pipeline expansion.
People who support Trans Mountain – and polling shows that’s a majority of Canadians and British Columbians – understand these benefits.
So why does the project remain stalled?
Opponents like to say that it comes down to the oil and natural gas industry’s environmental record and poor performance, which is simply not true. Much of Canada’s oil sands production has a greenhouse gas emissions intensity that is at, or comparable to, the average intensity for North American crude oil – with a pathway to be even lower.
In reality, Canada has worked hard to strike the right balance between economic growth and environmental sustainability with the introduction of initiatives such as leading climate policy that incentivizes and supports the development of carbon-reducing technologies. In fact, the country has some of the most stringent environmental policies in the world. The challenge is, with the cumulative impact of climate regulation, higher corporate taxes, project reviews that drag on for years and a lack of market access, Canada’s energy industry is quickly losing its competitive edge.
Foreign investment that should be flowing in to help develop our world-class energy resources, is leaving to go to the United States and other oil-producing jurisdictions where there’s more investment certainty, but in some cases far weaker environmental standards. Instead of gaining new markets for our oil and natural gas, we’re becoming more dependent than ever on a single customer – the United States – which has also become our biggest competitor for energy investment.
Make no mistake – driving energy investment out of Canada will do nothing to reduce greenhouse gas emissions. Global oil demand remains strong and that oil will be produced in other jurisdictions, with the associated jobs and economic benefits going to those countries instead of to Canadians. That’s an effective wealth transfer out of Canada.
We believe the better path is to keep those jobs and economic benefits in Canada by building the pipeline expansion and moving ahead with well-implemented climate change initiatives that leverage our industry’s proven track record for innovation and technology development to address carbon emissions. That would put Canada on the path to becoming a preferred supplier of responsibly produced oil and natural gas to the world. At the same time, we could begin to achieve full value for our country’s tremendous energy resources.
Canada and its economy are at a crossroads. To compete on the world stage, we need more than a pipeline to get our products to international markets. We need a thriving, ambitious and productive climate for business.
Let building the pipeline be that first step.