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It’s been two days now. since a large crowd gathered in the outdoor exhibit area of the Global Petroleum Show (GPS). at Calgary’s Stampede Park. to participate in a pro-pipeline. pro-oil rally. And so far. the high level of emotions directed at several governmental agencies has not ebbed. Indeed. people in Alberta. as well as other producing provinces. such as Saskatchewan. Manitoba. Newfoundland and even Ontario. remain extremely concerned about the future of Canada’s oil and gas industry. particularly as two pieces of proposed legislation continue to progress in the Canadian parliament.
What had the crowd of about 2.500 (rally organizers estimated 4.000 people. and the police said only 400 to 500—it was certainly more than that) upset was the continued. slow progress of two highly controversial bills. C-48 and C-69. which would put a giant “hurt“ on what already is a very weary and beleaguered Canadian industry. The C-48 legislation would “formalize“ a moratorium on oil tanker traffic in northern British Columbian waters. The C-69 bill would create a system that allows for indefinite pipeline project delays and the continued stagnation of major projects. Obviously. this would drive even more capital investment out of Canada. particularly Alberta.
Both bills are anathema to professionals working in Canada’s upstream industry. and feelings were still strong today. Thursday. among several GPS attendees that this editor talked with. Similar to people attending the rally calling the bills “despicable“ and “interfering with people’s livelihoods.“ industry folks termed the twin pieces of legislation “dangerous.“ “commerce-restricting“ and “ruinous.“ among other terminology. And they blame British Columbia for not allowing pipeline projects to be built through its territory to the west. they blame Quebec for stopping pipelines from being built to the east. and they certainly blame the administration of federal Prime Minister Justin Trudeau for not doing enough proactively to sort out the situation fairly. in everyone’s best economic interests.
While the Canadian Senate in Ottawa was considered a beacon of hope. when in recent days it offered or tacked on numerous amendments to both bills. to make them more workable. Albertans’ hopes were dashed almost immediately. when the Trudeau administration indicated that it will reject pretty much all the amendments. Remarkably. the usually mild-mannered Canadian Association of Petroleum Producers (CAPP) on Wednesday issued a scathing opinion in a news release. saying that the Trudeau regime “is ignoring the Senate and the will of Canadians. risking the country’s economic future by not accepting the package of amendments the Senate proposed to Bill C-69. the Impact Assessment Act.“
CAPP went on to say. “The amendments to Bill C-69 were developed after the biggest cross-country legislative consultation process ever held. The Government of Canada has rejected amendments that would have made this bill workable. Energy produced the Canadian way is world class. We expect rigorous regulation and oversight. But when projects meet all reasonable regulatory requirements. proponents. and their investors need a level of certainty that those projects will be built.“ So. it will be interesting to see how the fate of these two bills plays out.
Meanwhile. CAPP today released its rather sobering 2019 Crude Oil Forecast. Markets and Transportation report. CAPP said that “a constrained growth outlook means a missed opportunity for Canada’s oil sector.“ That sector. continued the association. “is missing a significant opportunity to benefit from the global commodity price and finally receive fair market value for Canadian resources.“
CAPP projects that Canadian crude oil production will increase 1.27 MMbpd. to 5.86 MMbpd by 2035. This represents a 1.44% growth rate. less than half of what was projected in CAPP’s 2014 outlook. But what CAPP did not say was that Canadian oil output is likely to remain stuck at the current 4.1 MMbpd for the next couple of years. unless something happens to break the pipeline project logjam.
This year. capital spending in the oil sands is set to decline for a fifth consecutive year. to roughly $12 billion. approximately one-third of the investment seen in 2014. Conventional oil producers are expected to drill fewer wells in 2019. compared to either of the two previous years. CAPP’s dismal outlook is that this drilling activity is not likely to improve without better market access via pipelines.
