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The Competitiveness Slump

Tim McMillan, president & CEO of CAPP.

The nature of news is that only big stories (good or bad) usually get most of the attention and it’s often after the fact. There are countless recent and vintage examples that subtle and gradually developing issues are relegated to hit-and-miss regarding the garnering of news attention – until something big happens.

While it may not be the motive, CAPP (Canadian Association of Petroleum Producers) published an important and proactive report urging the Government of Alberta to take action to close the competitiveness gap for the province’s oil and natural gas industry.

According to the report, “Global energy demand is on the rise and the world will need more energy in all forms, including oil and natural gas.”

The Canadian energy industry has a long history of innovation and technological advancements that have improved efficiency and environmental performance, while growing production. The report makes the case that Canada has an opportunity to become the world’s preferred energy supplier, generating economic benefits and minimizing the environmental impacts at home and around the world.

But the report also emphasizes that in order for Alberta to take advantage of this opportunity, it is imperative the province competes on the global stage.

CAPP facts and figures show the oil and natural gas industry has faced significant hurdles to development in recent years – none more challenging than the struggle to maintain competitiveness and attract international investment.

At a time when both global energy demand and oil and natural gas investment are on the rise around the world, CAPP states investment in Canada’s upstream oil and natural gas industry is expected to decline. While U.S. investment is increasing by approximately 15 per cent, Canada’s unconventional oil and natural gas investment is expected to be flat.

“Capital investment in the oilsands has been decreasing for a fourth consecutive year since 2014 when it was $81 billion and is now expected to drop to $42 billion in 2018,” Tim McMillan, CAPP president and CEO, explains to Business in Calgary. “In order to improve competitiveness, the regulatory process needs to be streamlined by reducing timelines, modernizing current regulations and improving efficiency.

“Market access is a key factor driving industry competitiveness, but it is only part of the equation. Government needs to address regulatory efficiency and certainty, climate policies, fiscal terms and resource access challenges that make Alberta less competitive compared to other jurisdictions,” he adds.

A key focus of the CAPP report is Alberta. It recommends the Alberta government create an overarching vision for future development with a specific long-term direction and strategic focus on competitiveness, including specific goals and performance metrics such as investment, production and project approval-related targets.

“Canada has an opportunity to ensure growing energy demand will be met by the most responsibly-produced oil and natural gas possible. However, government costs, regulatory barriers, inefficient policies and lack of market access are standing in the way of Canada meeting global energy demand, making it harder to grow our industry and support employment for Canadians,” McMillan warns.

CAPP represents companies, large and small, that explore, develop and produce natural gas and oil throughout Canada. CAPP’s member companies produce about 80 per cent of Canada’s natural gas and oil.