Oil and gas take a page from opponents’ playbook

The Chamber of Commerce held a meeting featuring the Canadian Association of Petroleum Producers last Tuesday.

CAPP president and CEO Tim McMillan said that the organization is starting grassroots rallies and sewing a sense of pride in Canada’s resources during July’s Chamber luncheon.

Possibly to the surprise of many, there are lessons that the national organization, Canadian Association of Petroleum Producers (CAPP) are taking from its opposition – grassroots movements usually involving no more than a few dozen citizens.

What isn’t surprising is how effective those lessons can be, and have been, in driving the conversation to their own end. Through rallies, demonstrations and sit-ins, opponents to the oil and gas industry are loud and vocal. And while there may be fewer of them in Canada than those that support the industry, they are much more effective at getting their message out there.

CAPP is trying to change that.

In an address to the Prince Rupert and District Chamber of Commerce last Tuesday, CAPP president and CEO Tim McMillan explored Canada’s future as a world oil and gas producer, its role in an ever-changing economic global landscape, and what CAPP is learning from the very people whose minds they are trying to change.

“Those that oppose [the industry] are three times more likely to be vocal about it than those that support,” explained McMillan.

“We want to turn that around. We think Canadians should be proud of the way we produce our resources. We have a great story to tell and we’re going to continue to tell it and we’re going to continue to empower Canadians who know our industry very well to speak up and be supportive of it.”

CAPP knows they have some work to do.

With an abundance of crude oil (Canada has the third-largest reserves in the world behind Venezuela and Saudi Arabia) and an ability to supply Canadians with the resource for 300 years with the current technology and production methods, McMillan outlined the opportunity Canada has in supplying the world with responsibly produced oil and gas.

The president specifically named India and China as developing economies with new power plants being built to allow a higher standard of living for those countries’ citizens as part of an industrialization movement.

“We have an opportunity to supply natural gas to a lot of those power systems and many of these countries are making decisions today between coal and natural gas.”

But times are tough. Oil prices are fluctuating and down from the past two years. A barrel of oil, which was once over $100, is now $45-$50, and reached as low as $20 earlier in the year. Natural gas is approximately $2 per gigajoule (The typical home consumes around 120 gigajoules per year), where it was once $8-$9. Capital investment from the industry has decreased substantially, and while that’s not anything new in the ebb and flow nature of the industry in Canada, it’s particularly concerning considering Canada’s lone customer for oil and natural gas, the U.S., won’t be needing our product so much in the future.

“We have seen a dramatic pullback in the capital expenditure in the oil and gas industry. It’s by far the largest investor into the Canadian economy,” McMillan said, going on to show data detailing spending is expected to decrease by 35 per cent this year from 2015 to only $31 billion from approximately $48 billion.

“That is being felt across Canada. We estimate about 100,000 to 110,000 Canadians have been laid off because of the low price environment that we’re currently in and it’s a very challenging time. We see revenues drop from $150 billion to about $73 billion and that’s the equivalent of the entire revenues of the auto sector,” said McMillan.

But the president sees opportunity in the years ahead. With the U.S. becoming more self-sufficient in the natural gas sector in the next three-to-five years and the oil sector in the next five-to-10, McMillan thinks that Canada has a chance to become a world leader in oil and natural gas export, should some of these projects come to fruition by delivering product to burgeoning industrialized countries like India and China.

“We have a mature and skilled workforce. We have the technology that continues to drive our exploration and development in ways that other countries can’t compete. If we look at places around the world that has the potential to develop their resources, next to none have the regulatory framework or standards that Canada has … Companies that want to invest in Canada – they know the rules and they know that they will be applied fairly and evenly to all parties,” he said.

But in order for these export terminals and pipelines to be approved, Canadian supporters need to get loud and proud.

CAPP is touring B.C.’s northwest talking to municipal governments, First Nations leaders, Chambers of Commerce and Rotary Clubs, engaging with community leaders in drumming up support and mature conversations about Canada’s resource economy and the oil and gas sector. CAPP has even organized tours of some oil sands, fracking facilities and pipelines for northwest B.C. First Nations leaders at Fort McMurray, an historic first for the coastal area.

“We’re going to connect them with some First Nations leaders that know the upstream side of the business there and really facilitating knowledge and sharing amongst those groups, and ultimately get us to a place where we can make good, positive decisions,” said McMillan.

Those meetings are scheduled for later this summer.

And while a competitive advantage for Canada over places like Venezuela and Saudi Arabia is its regulatory framework, sometimes those framework processes can drag on, as the North Coast has witnessed with Pacific NorthWest LNG’s Lelu Island export terminal project has shown. But the CAPP president is aware of those lengthy delays.

“I think Canadians have an expectation that we have some of the best regulatory frameworks and institutions that take a thorough and in-depth look [at these projects]. I think we can do both – have that high standard and a timely efficient system. Those two aren’t mutually exclusive and I think it will serve us all well if we continue to look at how we can streamline these processes while still maintaining that high standard,” he said.

“As Canadians, we are often self-critical. That’s part of our nature. We are a very polite and thoughtful people and I think that’s one of our strengths, but when it comes to positioning ourselves [as leading world competitors], we need to have mature conversations where we can talk about issues, ask good questions, have legitimate answers and where we can make the nation-building decisions.”

To join the conversation or to lend your support to the sector, visit www.energycitizens.ca to learn more and show support for Canada’s oil and natural gas resources.

 

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