Collaboration between industry and government key to enhancing the competitiveness of Alberta’s oil and natural gas sector internationally: CAPP

July 05, 2017 - Calgary, Alberta
The provincial government and the energy industry could create more than 24,000 new jobs for Albertans and grow the province’s economy by nearly $5 billion over the next three years by working together to enhance the competitiveness of Canada’s leading trade sector, according to report, A Competitive Policy and Regulatory Framework for Alberta’s Upstream Oil and Natural Gas Industry, by the Canadian Association of Petroleum Producers (CAPP).

Industry continues to face mounting costs and barriers to growth due to changes in provincial and federal government policies and regulations such as methane emissions, carbon pricing, municipal and corporate tax increases, wetland policy, well liability and closure, and caribou management, among others. In addition, low global commodity prices, rapidly changing market dynamics, and new policy directions in the United States have led to negative impacts on oil and natural gas investment and competitiveness in Canada. 

The report outlines how new competitiveness measures could be created to attract investment and create jobs in Alberta’s oil and natural gas sector, while protecting the high standards already in place for health, safety and environmental regulation.

CAPP estimates the cumulative costs associated with the changes in provincial and federal government policies and regulations to conventional and unconventional development could range between $450 million and $760 million annually in the near term. Overall capital spending in Canada is forecast to be $44 billion in 2017, a 46-per-cent decrease from $81 billion in 2014. Meanwhile, spending in the U.S. is expected to rise 38 per cent to $120 billion this year.

Through collaboration with government on essential policy challenges the energy sector can attract new investment to Alberta and improve our competitiveness. It is critical Alberta and Canada compare their policies and regulatory regimes with the U.S., our only major market for oil and natural gas exports, and our biggest competitor for capital. We need a made-in-Alberta approach to competitiveness.

By working together, CAPP estimates unemployment in Alberta can be reduced nearly 25 per cent. As well, we can generate $4.5 billion in gross domestic product, $207 million in additional income tax, and $79 million in additional royalties in the near term on an average annual basis.

Canada’s upstream oil and natural gas industry needs to rebalance the playing field and restore investment while maintaining Alberta’s position as a leader in responsible development. 

CAPP continues to review the competitiveness of Canadian jurisdictions.

CAPP quotes:
Tim McMillan, president and CEO 

  • “The upstream oil and natural gas industry provides many benefits to Albertans but continues to face challenges and barriers to growth and success, including policy and regulatory challenges at both the provincial and federal levels.”
  • “The uncertainty surrounding changes to government policies and regulations have resulted in increased cost burdens to the industry, ultimately affecting the upstream oil and natural gas sector’s ability to attract investment.”
  • “Opportunities exist for industry and government to work together to meet a common goal – responsibly grow oil and natural gas production to strengthen the economy and get Albertans back to work.”
  • “Our proposal to streamline provincial and federal policies and regulations has the potential to achieve regulatory efficiencies, eliminate duplication and create a framework for shared sustainable prosperity in Canada.”  

Rob Dutton, chair of Board of Governors

  • “The competition for capital in our business is fierce. It goes to the project and the basin with the highest rate of return. Alberta and Canada are becoming an increasingly more difficult place to attract capital.”
  • “Investment decisions in our industry often take place many years before a project comes on stream. In order to continue to attract those investments with a long-term horizon, we must have a degree of policy and regulatory stability. We need to collectively work together to get back to a place where Alberta can attract more of those long-term, job-creating investments.”
  • “Albertans and Canadians deserve a strong and future-focused economy where all partners work together. Industry is using many tools – efficiencies, innovations, and creativity – to try and remain competitive. However, we cannot do it alone. We must have all levels of government working with us – our future depends on it.”
  • “Albertans are smart and tough – we know how to come together to find solutions. The time for collaboration is now. Industry and government need to work together to ensure Alberta remains competitive.”

Supporting information 

  • CAPP’s analysis is available here.
  • In 2015, Alberta’s upstream oil and natural gas sector delivered:
    • $2.9 billion in non-renewable resource revenues;
    • $185 million in corporate income tax;
    • $2.8 billion in provincial personal income tax from direct and indirect employment;
    • $1.25 billion in municipal property tax on upstream assets alone; and,
    • Support for more than 20,000 businesses in Alberta, including 327 aboriginal companies, representing about $4 billion in activity.
The Canadian Association of Petroleum Producers (CAPP) represents companies, large and small, that explore for, develop and produce natural gas and crude oil throughout Canada. CAPP’s member companies produce about 80 per cent of Canada’s natural gas and crude oil. CAPP's associate members provide a wide range of services that support the upstream crude oil and natural gas industry. Together CAPP's members and associate members are an important part of a national industry with revenues from crude oil and natural gas production of about $120 billion a year. CAPP’s mission, on behalf of the Canadian upstream crude oil and natural gas industry, is to advocate for and enable economic competitiveness and safe, environmentally and socially responsible performance.

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