CAPP ratchets back expectations for oil supply growth, as industry holds its breath on Bill C-69
The Canadian Association of Petroleum Producers (CAPP) once again trimmed expectations for oil supply growth out of Canada, blaming the problem on lack of export pipelines and "inefficient regulations."
CAPP cut its annual oil production growth forecast to just 1.4%, less than half what was forecasted five years ago. Canadian oil output is now expected to reach 5.86 million bbl/day in 2035, up from the current average of about 4.3 million bbl/day. Capital investment is expected to fall to $37 billion this year, well below the 2014 high of $81 billion.
Capital spending in the oil sands is expected to fall to $12 billion, a fifth consecutive year of declines, and just one-third of the investment dollars spent in 2014.
Bad blood between Ottawa and Alberta not getting any better
Alberta's energy patch suffered another set-back this week, after the Trudeau Liberals rejected most of the 187 amendments put forward by the Senate on Bill C-69, which would see a complete overhaul of Canada's regulatory review process for natural resources projects.
Out of 187 changes put forward by the Senate, 62 were accepted and 37 modified, while 88 — which mostly came from Conservative Senators, were rejected outright. CAPP had proposed 43 “essential” amendments, but only three were accepted.
Federal Environment Minister Catherine McKenna added fuel to the fire, accusing the energy patch of ignoring the views of Indigenous Peoples, and wanting a regulator that rubber stamps all new projects, regardless of any impacts to society or the environment. The government says it won't allow "partisan oil lobbyists … undermine environmental protections."
As the bill stands right now, most in the energy sector agree no new pipeline will likely ever be proposed or approved in the future.
Suncor Energy CEO Mark Little says the bill "jeopardizes future development" and does nothing to restore investor confidence in Canada. Canadian Natural Resources President Tim McKay calls the new regulatory regime "legally vulnerable.” Imperial Oil CEO Rich Kruger warns the bill may force his company to reconsider "any and all future major growth opportunities."
Bill C-69 now awaits approval in the House of Commons, before being returned to the Senate. CAPP CEO Tim McMillan and Alberta Premier Jason Kenney have vowed to continue pressing for changes.