Federal government to study oil and gas competition
It looks like Canada’s role on the international oil and gas stage is shrinking, and Ottawa wants to know why.
The federal government will pay up to $280,000 for a study looking at the attractiveness of Canada’s upstream oil and gas industry to investors, as well as the effects of regulations and policies worldwide.
The project hasn’t even started but has already attracted plenty of criticism.
Saskatchewan’s current premier, Scott Moe, and his predecessor, Brad Wall, oppose spending money on the study, and are suggesting the answers seem clear.
“I think it would achieve exactly the same as the federal government looking in the mirror at some of the policies they’ve put in place that are reducing our competitiveness with our competitors such as the United States,” Moe said. “They can start by not doing this study and look at backing up some of the decisions they’ve made that are ineffective and direct costs for the industry.”
A notice of tender posted on April 4 by Natural Resources Canada shows oil patch investors may be eyeing markets like the United States rather than Canada.
“Investment in the US oil and gas sector is expected to outpace Canada over the coming years. This trend could accelerate with the recent us tax reforms and measures taken by the current us administration to deregulate the industry,” the notice read. “However, this trend may also partly reflect an increase in the cost of doing business in Canada, which may drive investment elsewhere if these costs increase beyond a certain tipping point.”
The United States also has the ability to offer short-cycle projects with a quick payout, like shale gas.
Petroleum analyst Dan McTeague says conflict over pipelines and carbon taxes may be factors driving potential investors south.
“Withdraw your position on carbon until the United States and your most important competitors have decided to hand-in-hand with us. Otherwise, you’ll wind up with carbon leakage, and that’s exactly what’s going on. Canadian companies are pulling up stakes and going to the states,” Petroleum Analyst, Dan McTeague told Global News. “There’s no doubt Canadian oil is favoured. Unfortunately for us, the only people who can take ready advantage of it is existing pipelines to the United States.”
“Unless we build more pipelines and get a reasonable amount of oil into international markets, it’s not just the oil industry that’s going to suffer.”
The federal government has tentatively pegged a Texas-based company to conduct the study, with results expected by June 30th.
© 2018 Global News, a division of Corus Entertainment Inc.