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CAPP pushes Ottawa to adopt measures for suffering energy sector

June 4, 2020   Don Horne




As governments turn their attention to the reopening and rebuilding of Canada’s economy, the Canadian Association of Petroleum Producers (CAPP) is urging Ottawa to adopt recommendations to save the nation’s oil and gas sector.

“Provincial and federal governments have stepped up to provide critical support to industry during this crisis but we cannot rely on government spending alone for recovery,” says Tim McMillan, president and CEO of CAPP. “It is crucially important we make the right policy decisions so Canada can compete for investment dollars in what is going to be a hyper-competitive international market.”

The recommendations to the federal government include:

  • A visible government commitment to work with the oil and natural gas industry to demonstrate Canada is a supportive and competitive country in which to invest over the long term.
  • Prioritize a 100 per cent immediate deductibility, levelling the playing field consistent with other capital intensive industries in Canada, for oil and gas sector capital investments; including clean technology and emission reducing investments.
  • Work together to develop and implement an integrated recovery strategy that considers goals around economic growth, job creation, Canada’s climate targets, its clean technology export ambitions and economic reconciliation with Indigenous communities.

McMillan goes on to say that CAPP recognizes the Government of Canada has expressed deep concern for the serious impact this unprecedented crisis is having on the oil and natural gas industry and the people whose livelihoods rely on the sector.

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“A strong industry creates jobs for Canadians and generates desperately-needed revenues for government. The oil and natural gas industry is crucial to our country’s economic well-being and can help lead our recovery, as well as be the foundation for long-term resilience,” he says.

The federal government’s implementation of the wage subsidy program, funding for orphan and inactive wells and the Emission Reduction Fund, along with liquidity measures for small and large producers have offered vital support to keep workers employed, help companies survive and position the industry to take advantage of a global economic recovery.

Provincial governments have also implemented programs and are making significant efforts to complement the federal support.

The federal and provincial government supports have rightly been focused on short-term economic survival. However, to turn from near closure and contraction to recovery and growth, Canada’s economy cannot rely solely on government support.

CAPP states that the pathway to rebuilding requires encouraging and attracting private investment back to Canada’s industries.

In the wake of the COVID-19 crisis, Canada will be competing with every other jurisdiction in the world for more limited investment dollars.

Oil and natural gas projects are shovel-ready and shovel-worthy. They can immediately put Canadians back to work with a multi-billion-dollar national supply chain, offer economic and self-sustaining opportunities for Indigenous communities and generate desperately-needed revenues for governments in the form of taxes and royalties. These objectives can be achieved while leveraging the sector’s leadership in emissions reduction, water protection, and land and species management.

CAPP has publicly released letters it submitted to the federal government through the organization’s ongoing work with a number of ministries to stabilize Canada’s economy and position the country for recovery. The May 27 letter focuses on economic recovery and outlines three areas of recommendation to provide certainty to capital markets and attract investment back into Canada’s resource industry.

The oil and natural gas sector is Canada’s largest industry, generating more than $100 billion in gross domestic product (GDP) annually and supporting half a million jobs across the country. The industry is also the biggest source of international investment and produces the country’s largest export commodity.


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