Canada’s oil industry is losing its competitive edge because the federal government isn’t doing its job in getting pipelines built and providing regulatory certainty, the CEO of Athabasca Oil Corp. charged Friday at the company’s annual general meeting in Calgary.
But Prime Minister Justin Trudeau countered that he supports the controversial Kinder Morgan’s Trans Mountain pipeline expansion and competitiveness of the industry is important to his government, speaking at a news conference following a tour of the new Fort Hills oilsands mine operated by Suncor Energy Inc. north of Fort McMurray.
Canada’s federal government has failed to defend the country’s vital energy industry and left it open to attack by opponents, said Athabasca CEO Rob Broen.
“I would tell him he has to show leadership on the pipeline file. And it’s not just words,” Broen later told reporters when asked what he would say to Trudeau.
“He needs to back up Kinder Morgan, the pipeline he’s approved, and he needs to see it through to construction and make sure we can put shovels in the ground and get it built for the benefit of all Canadians.”
Trudeau reiterated his support for the pipeline, repeating his message that Canada needs to protect both its environment and its economy.
“There are a lot of places around the world that don’t have the same kind of labour expectations or environmental impacts or even energy requirements that we have here in Canada and that is actually encouraging us to innovate, encouraging us to move forward,” he said.
“We have to make sure that the balance is right, that we’re still globally competitive — and competitiveness is something this government will always focus on — but we also shouldn’t be part of a race to the bottom of trying to cut standards and pollute more just for the short term.”
Athabasca, which operates both steam-driven oilsands projects and conventional light oil wells in northern Alberta, bought the producing Leismer oilsands project and the proposed Corner oilsands project in 2016 from Norwegian national oil company Statoil, adding them to its existing Hangingstone works.
Leismer has regulatory approval to double production to 40,000 barrels per day and Corner has the same approved capacity, Broen said, but neither can be sanctioned by the company in the current climate of uncertainty created by government policies and heavy oil price discounts linked to pipeline export constraints.
“We need to see regulatory certainty, and there’s still uncertainty with respect to how the carbon tax is implemented, what the emissions limit looks like, how projects get approved to move forward,” he said.
“We need to see an environment where this industry is supported and not at risk of having financial burdens placed on them in the future once sanctions are already committed to.”
Athabasca has signed contracts to move 20,000 barrels per day on the Trans Mountain expansion and 10,000 bpd on the Keystone XL pipeline to the U.S. Gulf Coast. Both are approved but have faced delays.
Broen’s criticisms echo points raised by the Canadian Association of Petroleum Producers in its recent campaign to convince governments to restore investor confidence by cutting taxes and easing regulatory burdens.
CAPP has warned that there are about 50 changes to energy industry policies being contemplated by provincial and federal governments, including recently proposed sweeping changes to the Canadian Environmental Assessment Agency and the National Energy Board, that are harming Canada’s reputation as a transparent and fair place to do business.
Suncor CEO Steve Williams has also warned that “Canada needs to up its game” to attract investment away from the U.S.
Both Trudeau and Alberta Premier Rachel Notley have touted Alberta’s carbon tax imposed last year as a trade-off for having pipeline projects go forward but Broen said he doesn’t think that strategy is working.
“We have a carbon tax but we don’t have a pipeline. And the opponents of those pipelines are more entrenched than they’ve ever been,” he said.
“So the tax hasn’t helped.”
He added he thinks carbon tax proceeds should be used to support innovation that leads to lower emissions “and not go into general funds,” an apparent reference to the plan in Alberta’s recent provincial budget to use future carbon tax increases to return to a surplus.