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Trying to win over hearts and minds
Gary Park For Petroleum News
Canada’s petroleum industry is going on the offensive, tired of being pilloried and booted around in the arena of public opinion.
A “broad-based” coalition, led by the Canadian Association of Petroleum Producers, nine other industry associations and various energy groups, is mounting a PR blitz under the “Alberta is Energy” banner to promote the contribution of oil and natural gas to the province’s overall economy.
The agenda includes a Web site, media campaign and town hall meetings to counter what CAPP has long argued is the distorted criticism of the industry’s environmental performance while building policies that are “favorable” to the contributions of the oil and gas sector to the provincial and national economies.
The effort to raise public awareness will eventually be extended to British Columbia and Saskatchewan, which, together with Alberta, account for well over 90 percent of Canada’s oil and gas output.
Wining at home “From our perspective, ‘Alberta is Energy’ is really about winning at home and creating a different kind of engagement and relationship with the producing provinces,” said CAPP president David Collyer.
Roger Soucy, president of the Petroleum Services Association of Canada, said the decline in employment among his member companies to 50,000 now from 70,000 in 2008 is the kind of downturn that “helps people focus on where their bread is buttered.”
Alberta Energy Minister Ron Liepert welcomed the initiative and agreed the industry has to do a better job of communicating with Albertans and all Canadians.
CAPP estimates the upstream industry spent C$54 billion in Canada in 2008, including C$39 billion in Alberta, generating C$8.5 billion in federal and provincial taxes in addition to C$10.7 billion in royalties for the Alberta government. Alberta royalties have totaled C$55 billion over the past decade, or about 56 percent of total revenues.
But CAPP noted that the recession, which increased Alberta’s unemployment level by four percentage points to 7.7 percent last August, boosted the jobless rate in the oil and gas industry to 9.7 percent — figures it calculates amounted to a C$20 billion decline in industry spending from the peak.
Rise in Canadian dollar However, Erin Wear, an economist with the United Steelworkers Union, said a thriving all and gas sector has contributed to a sharp rise in the Canadian dollar, with a negative fallout on Eastern Canada’s manufacturing sector.
But the return of the Canadian dollar to parity with the U.S. greenback in April is spreading a measure of gloom through the Alberta government and the ranks of Canadian oil and natural gas exporters.
Alberta Finance Minister Ted Morton put it bluntly. “It’s a potential billion-dollar hit,” he said, noting that every 1 cent annualized increase in the Canadian dollar costs the Alberta government C$215 million from export revenues, given that the province has based its 2010-11 budget on the currency trading at 95 cents U.S.
“Is that a concern? Yeah,” he conceded. “But is it going to stay at parity for the next three years? Probably not.”
On the flip side, with crude pushing above US$85 per barrel (compared with the Alberta budget forecast of US$78.75) that would generate an extra C$186 million in revenues for every US$1 per barrel increase that extended over the full fiscal year.
Continuing the rollercoaster ride, Morton said his government is concerned about a new National Energy Board report projecting that declining Alberta natural gas production could cost the province up to C$500 million in lost royalties.
David Swann, leader of Alberta’s Opposition Liberal Party, noting Alberta’s expected budget deficit of C$4.7 billion, said the “government continues to paint a very rosy picture of the fortunes and how quickly we are going to get out of this mess,” when it has a bad habit of overestimating revenue and underestimating liabilities.
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