Canadian Association of Petroleum Producers forecasts a 14% in upstream oil and gas spending in 2021 IN CANADA. Let’s see how the Kenney government spins this. I will parse their rhetoric with facts. My commentary will be in RED.
HERE IS THE HEADLINE:
Minister of Energy Sonya Savage issued the following statement on the Canadian Association of Petroleum Producers’ (CAPP) projected 2021 energy sector capital investment increase of almost $3.4 billion:
This makes it look that this an Alberta investment level. The “almost $3.4 billion” is a National figure for all of Canada. The CAPP forecast of increased investment is $actually 3.36 billion. The $40million rounding up from $3.36 to $3.40 is also misleading political rhetoric.
This encouraging news demonstrates the ongoing resilience of Canada’s energy industry and its confidence in Alberta’s investment climate.
The CAPP forecast says nothing to support a conclusion of “ongoing resilience.” It actually notes the volatility and uncertainty in the industry. planned investment in 2021 is said to be”increasing for the lowest levels in more than a decade…and a halt to the dramatic decline since 2014.” In 2014 the actual energy investment was $81 billion.
CAPP says a year ago it ran a forecast of 2020 energy investment of $37 billion, not even close to the $24 that actually was invested. Today CAPP has a forecast of $27.3 for 2021. This 31% missing the forecast target shows the uncertainty and volatility of energy investment. This is not likely to engender “confidence in Alberta’s investment climate” and is hardly a testament to the industry’s “ongoing resilience.”
“Faced with the shock of the pandemic, the corresponding commodity price collapse and last spring’s temporary but debilitating price war, Canada’s oil and gas companies have once again demonstrated their adaptability, expertise and innovation to stabilize the industry.
“We recognize that this past year has been difficult for so many in our industry, with companies needing to find efficiencies and realign their operations.
“However, today’s news mirrors the considerable optimism we have recently seen in Alberta through increased drilling, rig counts and upstream development CAPP says Alberta’s upstream investment is estimated to be $11.8 billion in 2021 up from $10 billion in 2020, underwhelming!– all of which will drive jobs, revenues and further investment in our province. We have more work ahead of us, but this is a great way to start 2021 and further demonstrates the importance of Alberta’s oil and gas reserves in meeting post-pandemic demand.
“Alberta’s government is committed to continuing to create the right policy environment to ensure continued responsible development and helping get an industry that supports more than 500,000 Canadian jobs fully back on its feet.
“That commitment has been demonstrated through the decisive action we have taken as part of Alberta’s Recovery Plan by accelerating the Job Creation Tax Cut This is a $3.7billion tax cut that was stated to be for job creation but the industry use the funds for dividend payments, executive bonuses, accelerated loan repayments, and share buybacks and establishing our corporate tax rate as one of the lowest in North America and 30 per cent lower than the next lowest province. What has this tax differentiation done to attract or keep investment? Shell, Conoco-Phillips, Total, Statoil, Devon, Husky, and others have divested in Alberta energy.
In May, we launched the $1-billion Site Rehabilitation Program The funds for this program came for Canadian taxpayers and are because of the failure of the Alberta energy industry’s legal obligation for well site reclamation and remediation. This is not yet operational as an Alberta program because Kenney doesn’t want to be accountable to Canada for the use of the funds to get Alberta’s oil and gas labour force back while speeding up well, pipeline and site closure efforts. More broadly, we have significantly reduced red tape to reduce the burden on job creators and encourage investment.
CAPP attributes the increase in energy spending to “the availability of COVID-19 vaccine globally, which should lead to higher economic activity and increased energy demand.” They attribute the modest investment increase to other “government supports introduced in 2020, including many at the provincial level, including reduction of municipal taxes owing, accelerated corporate income tax reduction, red tape reduction that eases or eliminate environmental protections and monitoring, and a $25, billion equity investment in the doubtful Keystone pipeline project that benefits the American market more than Alberta.
“With 43 per cent of the world’s accessible free-market oil reserves, we are perfectly positioned to offer investment in a stable and strong democracy. We have a highly educated, hard-working population and our province and industry are bound by the rule of law, an adherence to human rights, gender equality and a strong, transparent regulatory system.
“We will do everything in our power to highlight to the world the benefits of choosing Alberta.”
There is a lot more but you get the idea. This Statement is more about misinformation and propaganda than it is a report to the Citizens of Alberta, the Owners of these resources.