TORONTO (miningweekly.com) – The Alberta government's 2015/16 budget tabled last week would help keep the province's oil and gas industry competitive in a turbulent global market, supporting jobs and investment at a challenging time, the Canadian Association of Petroleum Producers (CAPP) said on Thursday.
The oil price collapse had resulted in oil and natural gas companies announcing more than 4 500 direct layoffs this year, with an further 23 000 jobs expected to be lost as a result of lower drilling activity. Capital investment in the industry was forecast to decline more than a third this year, from $69-billion last year to $46-billion in 2015.
"Albertans across the province are hurting with the drop in oil prices – from rig workers and service crews, to head offices, small businesses and local corner stores. Now is not the time to put more cost pressures on industry," CAPP president Tim McMillan said in a statement.
The Alberta budget would not directly impact the oil and gas industries. The budget held no changes to corporate income tax, the oil and gas royalty structure, or incentives for research and development.
According to Alberta's budget documents, the oil and gas industry's payments to the province were forecast to decline 67% from $8.8-billion last year to $2.9-billion this year.
Oil and natural gas payments represented 7% of total provincial government revenue this year, a number that was forecast to grow to 15% by 2020. In addition, the industry contributed about $1-billion a year in municipal taxes and had paid nearly $500-million in greenhouse gas-related levies since 2007.
According to CAPP, the oil and natural gas industry employed one in every six Albertans, with substantial related employment created in sectors such as hospitality, transportation, food services, consultation, construction and real estate. Each dollar invested in the oil and natural gas sector created three dollars of value in Alberta's economy across the province, particularly in rural communities.
"The global market for oil and natural gas investment is extremely competitive. If we are going to continue to grow Alberta's oil and gas industry – creating more jobs and increasing public revenues to improve our quality of life – then we must keep Alberta attractive for this future investment," McMillan said.
The CAPP's member companies produced about 90% of Canada's natural gas and crude oil. Together CAPP's members and associate members were an important part of a national industry with revenues of about $120-billion a year.