Representatives of the Canadian petroleum industry expressed their disappointment following the release of the federal budget this week. The Canadian Association of Petroleum Producers (CAPP) said the federal budget has sent the message that oil and gas jobs are not a priority and does nothing to get people back to work or spur investment in Alberta's key industry.
The budget shows CAD $1.6 billion of mostly loans to the industry. Natural Resources Minister Amarjeet Sohi said the aid package would include CAD $1 billion for energy exporters to invest in new technologies, boost working capital or find new markets. CAD $500 million goes to commercial financing spread over three years to help high-risk oil and gas companies weather current market conditions, Minister Sohi said. Another CAD $100 million will go toward energy projects through an innovation fund, and CAD $50 million will fund projects that involve reducing environmental damage from resource extraction.
CAPP's Vice-President of oilsands Ben Brunnen noted the lack of new measures to attract capital investment, saying, "They're recognizing that the investment levels are down, they're recognizing that prices are down and that unemployment is up, and yet they're not really taking any meaningful action to support our industry.” Adding insult to injury, Finance Minister Morneau's budget includes a handful new initiatives aimed at helping Canadians who find themselves needing to make a career change.
Canada is producing a record 4.9 million barrels of oil per day this month, according to National Energy Board estimates, but pipeline capacity has not expanded as quickly to move crude to U.S. refineries. The oil and gas industry is the largest contributor of private capital investment in Canada with a record CAD $81 billion invested in 2014, accounting for over 600,000 jobs across the country, and generating a trade surplus for Canada of CAD $70 billion, far more than any other export industry in Canada.
Federal government policies drove off investment resulting in a 51 percent drop in 2018 to CAD $41 billion. The petroleum industry has been suffering from an economic recession since 2014 due to a combination of factors that include low commodity prices, lack of access to markets beyond the United States, and competitiveness issues stemming from legislation such as Bill C-69.
President and CEO of the Petroleum Services Association of Canada (PSAC) Gary Mar expressed the same sentiment in light of no measures to address Canada’s competitiveness issues to encourage private capital investment and stimulate job creation. “For a government that says it wants to help middle-class Canadians, one measure put forward by PSAC that would have led to $700 million in private capital investment to decommission wells, creating over 6,000 jobs and generating positive environmental results was nowhere to be found,” said Mr. Mar. With easily more than 100,000 mainly middle-class jobs lost, he added, “We could recover this tremendous advantage again but this Budget does nothing to address the critical issues holding back this vital industry.”
Chair of PSAC and President and CEO of CWC Energy Services Corp. Duncan Au agreed, saying, “While we recognize investment in skills training as important for a changing economy, frustration in our sector mounts and patience wears thin for real action to address issues for our industry including market access, Bill C-69 and competitiveness, as job losses continue. We were really hoping that our ‘Resource Environmental Tax Credit’ proposal would have been included in the Budget to demonstrate a concern for and willingness to recognize that this industry matters and benefits all Canadians.”