Originally posted on 12 February 2018
On Wednesday 7 February, Tim McMillan, president of the Canadian Association of Petroleum Producers (CAPP) spoke to the Edmonton Chamber of Commerce. The CAPP head spoke optimistically about growing demand for oil and natural gas, based largely on International Energy Agency forecasts. It was a “terrific outlook” with Canada being perceived as a “supplier of choice.” But dangers lie ahead, according to the CAPP head.
From: The Globe and Mail, Wednesday 7 February 2018
A grainy audio of his talk (with some audience comments) and question and answer is available here.
Speaking to a sell-out, business-friendly audience in the World Trade Centre with paper and electronic media in attendance, McMillan’s presence induced an atmosphere, while not electric, but rather anticipatory. What was McMillan going to say about TransMountain? was on the lips of the attendess. Many in the crowd were from outside the Edmonton area and all interested in the outcome of the B.C.-Alberta conflict. Interestingly, McMillan was reticent to talk about the Alberta-B.C. spat.
McMillan is an accomplished lobbyist having learned the trade from inside the Saskatchewan government as a Saskatchewan Party MLA elected in 2007 and the Energy Minister under former Premier Brad Wall. In addition, he worked in the industry before entering politics. He is a low-key speaker, who carefully chooses his phrases as not to become hyperbolic. He is a good communicator versed in dropping key phrases and ideas that advance his industry’s cause.
Clouds on the Horizon
McMillan mentioned that capital was flowing out of Canada and “being re-allocated to Iran and Brazil.” On top of that: “our largest customer is becoming our biggest competitor.” For example, Marcellus gas is displacing gas from Western Canada. Another major issue is the change in government in the U.S. where changes to taxation, drilling and other regulatory rules to attract more capital.
Regulatory Competititon He added that the Interior Department in the U.S. was now being directed to narrow their focus to core activities with a view to facilitate investment in the energy sector. was the 7,000 jobs at risk from new methane regulations. He added that the EPA is re-defining itself to become an “efficient regulatory system.” The goal is to streamline regulation “and it’s working.”
Project Cancellations McMillan went on to cite a number of project cancellations that have and would harm investment in Canada and jobs. “Canada is a place where we can’t get things done.” McMillan then went on to flag four major issues (40 or of 50 regulatory issues that his organization was tracking). Canada’s record is “challenging.”
- New regulatory review process will be announced by the federal government.
- Market access – on Kinder Morgan, British Columbia doesn’t have a role. Rather they have a role to engage with their citizens to support the environment “We are not sending a consistent message that we can get things done.” He reaffirmed that the federal government has jurisdiction.
- The “partnership” on methane with the U.S. is now gone by the board. Accordingly, the U.S. withdrawal will harm Canada’s competitiveness. So industry is pushing government to create a more efficient approach but it will still cost “hundreds of millions” of dollars and could place 7,000 jobs at risk. McMillan observed that most of the major U.S. gas states are not pushing the Obama era “ambitious” goals, making Canadian industry vulnerable.
- On the Carbon emissions program and how the large carbon emitters’ tax will be levied is where a” yellow flag has been thrown on the field” by the industry. The structure will “pit community against community and company against company”. According to McMillan, we wanted to “raise all boats” but the present proposal will not allow companies to share their technology. As well, the proposal does not take into account the different local geologic formations.
He also reiterated the hundred thousand or “up to 150,000” oil and gas jobs that have been lost to the economy since 2014. “It is still about 100,000 Canadians who have lost their jobs.”
In the Q+A period that ensued, several issues were raised including the widening spread between WTI and Western Canadian Select. Mr. McMillan lamented that the economic importance of the energy industry is not well understood throughout Canada. McMillan urged the audience to join Canadian Energy Citizens, a “grassroots” advocacy group with 200,000 members supporting the energy industry.
A second question from the audience was how can we move up the value chain rather than explore raw bitumen? McMillan acknowledged that his membership were not involved in value-added production. He then added that petrochemical investment in Canada was one one-hundredth of what petrochemical investments in the U.S. Future U.S. tax policy will further boost the competitiveness of U.S. industry. “We have a problem,” he stated.
Another questionner asked about CAPP’s advocacy efforts with governments in Canada. McMillan shared that he was meeting this week with Chiefs of Staff in federal ministers’ offices. One member oi the audience, from an environmental consulting group, raised concerns about the difficulties faced when seeking company buy-in for water conservation measures. McMillan didn’t answer directly but spoke about “continuous improvement initiatives.”
On Kinder Morgan, politicization by the B.C. government was “irresponsible.” CAPP expects the federal government to reaffirm that the project enjoys the continuing support of the Canadian government. CAPP supports Horgan on LNG projects, some of whom participants were losers on the Northern Gateway decision. McMillan did feel the Kinder Morgan project would be built but the B.C. government action was “unhelpful.” McMillan opined that “grassroots” engagement and association and company involvement was very important to advance the industry’s agenda. A key problem is how to engage citizens at Tim Horton’s to recognize the economic losses from the failure to implement these projects.
Several contradictions emerge from this talk. Although Mr. McMillan thinks the “goals” of the “economy” and the “environment” aren’t antagonistic, he harnesses competitiveness as a reason to disparage environmental goals, because jobs are lost. His remarks notably omitted global warming or climate change; words not uttered either in the Q+A portion of the meeting.
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