Cenovus CEO calling for drilling restrictions
The Canadian oil patch is losing patience with the country’s lack of support for the industry.
The plunge in global crude prices is being exacerbated in Canada by a lack of pipeline capacity, sending the country’s oil prices to a near record discount to the U.S. and energy stocks reeling. Gas producers can’t even catch a break: while U.S. gas has surged about 19 per cent in the past week amid an expected cold stretch, Canadian prices have actually dropped 14 per cent.
“Globally, we’ve politicized energy so much," Darren Gee, chief executive officer of Peyto Exploration & Development Corp., a Calgary-based gas producer, said in an interview at Bloomberg’s Toronto office Wednesday. Environmental and regulatory concerns have added an “entire layer of risk that people just don’t know how to asses.”
Gee joins other executives and investors lamenting the country’s inability to get its energy to global markets. The Keystone XL and Trans Mountain oil pipeline projects are facing fresh environmental scrutiny while gas exports are largely handled by only one pipeline company, TransCanada Corp., said Gee.
An analyst with one of the largest foreign holders of Canadian energy stocks, Capital Group Cos., warned in a letter to Prime Minister Justin Trudeau recently that investors and companies will continue to avoid the Canadian energy sector unless more is done to improve market access.
Canada’s main energy index is down 11 per cent over the past 12 months compared with a 3.4 per cent drop for U.S. energy stocks.
While the government bought the Trans Mountain project in an effort to get more oil flowing to the Pacific coast, Gee holds out little hope of progress. Trudeau’s government has “absolutely no interest in having that pipeline built or expanding this basin," Gee said.The government’s seeming indifference to the patch’s plight is likely to foment political friction in Alberta, he said.
“I’m quite afraid that we’re going to see a separatist agenda in the west and a lot of separatist movement because of the energy industry. I’m afraid for Canada for that reason," Gee added.
Advantage Oil & Gas Ltd.’s CEO Andy Mah said the country has to stand up for the industry. “We keep coming back and finding better ways to do things but there gets to be a point where we need people, public and political, to understand this is a big sector in Canada,” he said in an interview at an energy conference in Toronto on Wednesday.
Former Canadian Prime Minister Stephen Harper said Canada could be an energy superpower but he should have made clear that “the rest of the world will fight us tooth and nail for market share like mad, so get ready Canada, we’ve got to put our elbows up and fight back,” Gee said.
"As a Canadian, I’m offended by what’s going on," Daniel Halyk, CEO of Total Energy Services Inc. said at the GMP FirstEnergy conference. “We’re selling our resources for pennies on the dollar.”