VANCOUVER (miningweekly.com) – Rising government costs, the burden of inefficient regulations, and the lack of infrastructure to move Canadian energy to growing markets are undermining investor confidence in Canada, a new report by the Canadian Association of Petroleum Producers (CAPP) has found.
Published earlier this week, the CAPP report entitled 'A Global Vision for Canadian Oil and Natural Gas' stressed that these issues are undermining investor confidence in Canada and negatively affecting the country's ability to attract the capital needed to create jobs and national prosperity.
According to the CAPP, Canada was last year the only jurisdiction globally to have seen a decline in the oil and natural gas sector.
The report highlighted data suggesting that total capital spending on Canadian oil and natural gas was $45-billion in 2017, down 19% from 2016, and down 46% from the $81-billion recorded in 2014. In comparison, capital spending on oil and natural gas in the US last year rose by 38% to $120-billion. Critically, the CAPP noted that it had taken Canada 150 years to grow its oil and natural gas production to current levels and only eight years for the US to accomplish the same.
"Across Canada, government costs and regulatory barriers are on the rise - making it harder to grow our industry and create and support jobs for Canadians. Energy jobs and investment will leave Canada for other countries unless there are changes to encourage growth the industry can build on.
"Today Canada's No 1 energy customer - the US - has become our No 1 energy competitor," CAPP president and CEO Tim McMillan said in a statement.
In its latest energy forecast published in November 2017, the International Energy Agency predicted a 30% increase in global energy consumption by 2040.
Further, capital investment in Canada's energy sector generates country-wide economic activity, spurring job creation and growth for all levels of government - including about $19-billion in yearly government revenues in 2015 and 533 000 jobs across the nation in 2017.
The CAPP proposed that the federal government establish a four-part vision for the oil and natural gas sector, including emphasis on creating global connection for Canada's significant oil and natural gas resources; implementing globally competitive policies that increase the country's ability to attract capital; implementing climate plans comparable with other jurisdictions competing for the same global capital; and calling for government policies that spur and accelerate innovation and technology in the oil and natural gas sector.
"Across Canada, government costs and regulatory barriers are on the rise - making it harder to grow our industry and create and support jobs for Canadians. Energy jobs and investment will leave Canada for other countries unless there are changes to encourage growth the industry can build on. Today, Canada's No 1 energy customer - the US - has become our No 1 energy competitor," McMillan advised.
Canada, which holds the world's third-largest oil reserves, is in critical need of expanding its existing four-million-barrel-a-day pipeline network, which is operating at capacity. The bottlenecks are expected to intensify up to 2030, when Canadian oil supply is expected to grow to 5.4-million barrels a day.
Scotiabank recently quantified that the impasse on building new pipelines cost the Canadian economy C$15.6-billion a year, or 0.75% of the country's gross domestic product.
Meanwhile, the Western Canadian province of British Columbia is actively sabotaging plans to expand the country's pipeline infrastructure, prioritising environmentalism over the economic welfare of Canadians. It has deployed delay tactics on the proposed – and approved – multibillion-dollar Trans Mountain Expansion project, that would triple the volume of diluted bitumen reaching tidewater, and which could lower petroleum prices in a region paying the most in North America for the critical fuel commodity.