A recent report by Canadian energy investment firm Peters & Co. notes that Canadian exploration and production spending will fall by six percent while U.S. industry spending in the same category will increase by 14 percent in 2018.
Earlier in the month, Scotiabank projected that lack of pipeline infrastructure will cost Canada’s economy $15 billion this year, or $43 million a day. Canadian oil is selling at its deepest discount since the commodities slump began in 2014, currently about $25 less per barrel than comparable U.S. products.
In the drilling and service sector, we are seeing many of our members relocating rigs to the United States to pursue new growth opportunities. This only makes sense from a business perspective. It’s not all about ground and weather conditions. At this point the promise of American energy independence seems almost quaint. In fact, the International Agency predicts that the U.S. will become the world’s dominant energy supplier by 2025, the year when the country’s oil output will rival that of Saudi Arabia at its peak.
Technology and geological providence certainly play a part in America’s incredible drive toward becoming a major exporter of oil and gas. But these dynamics don’t tell the whole story. Canada is also richly blessed with oil and gas deposits — the Monteny’s shale prospects have been compared to those offered by the Permian basin by many observers. And our oilsands producers and pipeline companies are second-to-none when it comes to extracting and transporting products that would have eluded industry prospectors a generation ago.
So what’s changed for Canada? Why are we ceding capital, iron and human ingenuity to our neighbors to the south?
In a word: policy.
Even as commodity prices stabilize, uncertainty has overtaken one of Canada’s most prosperous industries. Activists and activist policymakers have pitted themselves against the hard-working Canadians that keep our tanks full, food on our tables and our economy humming. Sometimes companies simply pull up stakes and focus on projects in other jurisdictions, as we saw in 2017 with the cancellation of Enbridge’s $36 billion Energy East pipeline and abandonment of Petronas’s Pacific NW LNG project, worth $35 billion.
Will 2018 prove to be a repeat performance for Canada? Right now, the Trans Mountain Expansion Project is languishing in regulatory limbo. The twinning of the pipeline was approved by the federal government in November 2016, but we have seen little leadership from that direction as the project has been dogged by stall tactics from municipal and provincial politicians in British Columbia.
We need our federal politicians to stand behind their own approvals process and clear the way for vital market access for Canadian oil and gas. Major energy infrastructure projects in this country have become de facto referendums on Canada’s oil and gas industry as a whole, as well as the future of global energy consumption. This is a dangerous trend, one that will relegate Canada to a bit player in a global system within which we should be assuming a position of leadership. More importantly, it will leave ordinary Canadians poorer and diminish our collective quality of life.
We have two options in front of us; develop and transport our best-in-class oil and gas resources or yield valuable strategic and economic power to other jurisdictions. Right now, it’s up to our elected officials in Ottawa to set us on the right path.
Help us support market access for Canadian crude products by sending a letter to Prime Minster Justin Trudeau. A template can be found at oilrespect.ca.