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CAPP Messages: Bill C-69 comment


June 19, 2019
By CAPP

June 19, 2019 – On June 13, members of the Canadian Association of Petroleum Producers (CAPP) stood at a press conference in Calgary, Alta., to voice their concerns about Bill C-69, the Impact Assessment Act, and the effect the legislation will have on the future of energy development in Canada.

Attendees:

Tim McMillan, president and CEO, Canadian Association of Petroleum Producers
Jeff Tonken, chair of CAPP, president/CEO, Birchcliff Energy
Tristan Goodman, president, Explorers and Producers Association of Canada
Mike Rose, chairman, CEO and president, Tourmaline Oil
George Fink, CEO and chair, Bonterra Energy
Tom Mullane, president and CEO, Freehold Royalties
Byron Nodwell, President and CEO, Longshore Resources
Sue Riddell-Rose, president, Perpetual Energy
Brad Gardner, president and CEO, Prosper Petroleum
Bob Shepherd, EVP, PetroChina Canada
Byron Lutes, president, Mancal Energy
David McCoy, VP and general counsel, Enerplus
Jonathan Wright, CEO and president, NuVista Energy
Kevin Stashin, CEO and president, NAL Resources
Glenn Gradeen, president and CEO, Tnagle Creek Energy
Marty Proctor, president and CEO, Seven Generations Energy
Doug Bartole, president and CEO, InPlay Oil
Glenn Carley, chairman, Painted Pony Energy
Rob Maier, vice president, Chevron
Terry Anderson, senior vice president and COO, Arc Resources
Angela Avery, general counsel and VP business development, Athabasca Oil
Satoshi Abe, president, Japan Canada Oil Sands
Jason Skehar, president and CEO, Bonavista Energy
Scott Robinson, former COO, Peyto Exploration and Development

Opening remarks re: Bill C-69

Tim McMillan, president/CEO, CAPP

This has been a very challenging piece of legislation. We’ve worked with the federal government for almost three years to try and make this Bill workable. The federal government had introduced it – we saw some very big problems with it right off the bat, and have been engaged ever since.

We have worked earnestly with both government and the Senate. In fact, we felt that the Bill was very well positioned and the Senate had positioned the government for success when it came out of the Senate a week and a half ago. We, unfortunately, were very disappointed yesterday when we saw what the government intends to do with the Senate amendments – stripping out all of the impactful ones, all but three that industry felt were key to making this Bill workable. We had our eye on a package of 43 amendments that were in that Bill, and only three of that 43 were ultimately executed by government.

We’re an industry that’s proud of how we operate. We’re the best in the world for providing oil and gas globally, and we are continuing to improve upon our performance. The world wants Canadian products, they want Canadian oil and gas, and we continue

to shoot ourselves in the foot and make it impossible for us to execute on the great resources and production that we have.

This Bill is going to make it even more difficult and the concern around it, as Canada’s largest investor in the Canadian economy, is great. All Canadians should be concerned. I think they are increasingly concerned as we see the Premiers of successive provinces writing letters and standing up and making statements. The federal government seems to continue to ignore the calls of those Premiers, of the Senate, and of the industry.

Jeff Tonken, president/CEO, Birchcliff Energy, CAPP chair

Our goal today is to provide you with some information and our views on Bill C-69. CAPP took the opportunity to spend significant time with its staff and with its members, and with its member companies, to negotiate in good faith with the Government of Canada to put in changes to Bill C-69. The result after three years of hard work and good faith negotiations were that three of our amendments were accepted to that Bill.

Our industry believes that with those amendments no further pipelines will be built in Canada under the legislation that’s being proposed. That, firstly, is a problem. The bigger issue for us is that our investors – Canadian and foreign – have lost confidence in the energy industry. They’ve lost confidence in the political regime that is in place in Canada, and that is driving investment in our shares and in our industry away. Bill C-69 will just further raise that issue for us.

Someone commented, ‘Why would you buy a Canadian energy company when once you purchase those shares the commodities they’re selling are sold at a discount because we don’t have access to tidewater?’

When you look at the broader issues of Bill C-69, it will stop future access to tidewater and that will then stop any growth in Canada, and that will have the result of current employment falling… but future employment in not only our industry but all of the industries associated with our industry. We believe that we’re probably the No. 1 industry that leads the GDP in this country. So this legislation is going to create an issue for the development of Canada, and is the reason why all these members are standing behind us today.

We believe, No. 1 that we’re Canadians, we want to see Canada flourish. We want to have the tax base to provide for health, education, infrastructure, and taking care of the elderly. If we don’t have that tax base, if we don’t have growth, if we’re not a leader both in our industry in the world with respect to our energy, than Canada is very quickly going to not be recognized as a leading entity in the world where business is. That’s No. 1. That’s where we think we should be.

No. 2 we are very, very respectful of the environment. We believe that our good business, and the regulations we have today, being one of the most highly regulated industries in the world, and having one of the highest levels of environmental stewardship – which we’re very proud of – the environment and good investment and legislation around all three can move forward together to have a country that we’re all proud of. The comments that the Premiers… by sending a letter to the Prime Minister, which represented, I think, 59 per cent of Canadians, and about 63 per cent of the GDP in our country, was sent in good faith. We feel that the negotiation of legislation which

represents all Canadians for the best outcome for Canada… that letter wasn’t sent to somehow discuss unity in our country, but it was sent to say you have a poor piece of legislation and here’s our input into that legislation so that we can all move forward together.

And that’s why we’re here today. We’re here today as concerned citizens of Canada for a better country. And that legislation is going to have the exact opposite effect on our industry and on the people of Canada. And we want to stand up today and make those points heard.

Mike Rose, chairman/CEO/president, Tourmaline Oil

This is extremely important for the whole country and it’s not just about our industry.

I’m going to go a little further along than what Jeff was talking about. Resource development and the environment – no industry works harder than ours to balance those two aspects. Over the years the oil and gas sector… 50 per cent of all the funds invested in environmental performance and improvement by all industrial sectors across Canada is from the oil and gas sector. The result of that over the years has been that Canadians oil and gas produces the net cleanest hydrocarbon molecule in the world. We are the best at it and everyone behind me continues to work on improving that performance and that will continue to happen. We have that one side of the equation.

As we look out to what is the energy mix for the whole world going to look like going forward, and all the estimates – and they’re not ours, they’re international agencies – they suggest somewhere between 50 and 55 per cent of the world’s future energy requirements are going to be met by oil and gas. Particularly gas will increase in that mix. That includes an enormous, unprecedented growth in renewables in those estimates. Oil and gas resources are going to get developed in the world, they absolutely have to, and that’s what will improve the standard of living in the developing world because we’ve figured out how to develop very, very cheap energy.

The best thing for Canada and the best thing for the world is that we develop as much of that oil and gas within our own country as is possible, and deliver those net cleaner hydrocarbon molecules to all the other jurisdictions in the world that need them. It’s the best thing for the global atmosphere because we have the cleanest hydrocarbon molecule, and it’s obviously the best thing for Canada because we will, literally, create hundreds of thousands of jobs on a continuous basis for this country. It’s an economic win and it’s a global environmental atmospheric win.

Unfortunately, C-69 and C-48 really prevent that from happening. If we do not get new pipelines and egress, Canada will not be providing those hydrocarbons and improving the environment throughout the world.

Tristan Goodman, president/CEO, EPAC

Since the founding of Quebec City back in the 1600s, Canada over the last four hundred years has developed its natural resources. Yes, there’s been some concerns but this continues to improve.

We really believe that this actually, on a go-forward basis, the world needs our energy. They’re going to need all energy sources across the globe and we think one of the best

places in the world to develop that is, clearly, Canada. We understand that Canadians have concerns around the environment. We also understand they want economic prosperity. Those two, right now, on a go-forward basis, are at risk. We think that this Bill is not appropriately positioned.

I’d also like to acknowledge the Senate. We’ve had tremendous work with the Senate, we’ve had great work with many different people across the country: those that manufacture goods here, those that produce those products, those in the retail space, those that produce autos, those that produce steel. There is grave concern on a go-forwards basis with what has happened with Bill C-69.

I think there’s no question that the government’s objective of a strong economy and a strong environment is aligned with ourselves. We would ask all Canadians to support that objective.

The actual results that we’re seeing today do not actually support that. We have a continued problem around the predictability for investors in this country and outside this country in development across all the natural resources. We also continue to see in this legislation, on a go-forward basis, political interference in the regulatory process. We need the regulators to do their job and we need to have confidence and trust in what they do.

My final comment is; let’s remember where we’re at as a nation. Coast-to-coast-to-coast we have an outstanding track record of change and evolution in the development of our great endowment of wealth. This Bill will prevent that from going forward and that is they key message we need to recognize on a go-forward basis.”

Tim McMillan, president/CEO, CAPP

I think it’s important that we, as an industry, have a common voice. We have worked very closely with EPAC on this Bill in trying to get it fixed. As well, as we have with the mining industry, with the offshore industry, with the manufacturing industry. Where today we have a strong oil and gas industry, I would expect over the coming days we will see the other sectors that contribute to the oil and gas sector, and those that are independent of it, also speaking out about their concerns, the damage the Bill is going to do to our economy and ultimately the government is going to step back from this Bill at this time. It’s too short before the election to get this fixed, we believe, and we can’t allow this to become law in Canada.

Question

The Prime Minister has said major projects in Canada can still proceed with Bill C-69 as it is. Is that possible?

Tim McMillan, president/CEO, CAPP

I think that it’s more important what the investors are saying. The folks here behind me are talking to investors on a daily, weekly, monthly basis and know this Bill well. I open this up to anyone that’s talking to investors about their views on this Bill.

Jeff Tonken, president/CEO, CAPP chair

The majority of Canadian energy stocks are trading at 52-week lows and that, in our view, is because Canadian and foreign investors have left the energy space. We believe that the companies that operate today have changed the way they operate, so they are some of the lowest cost producers in this industry. They’re very healthy companies that produce significant cash flow.

From a business perspective those companies are very strong. But what’s happened, not only because of the current legislation but now Bill C-69, which all of them are watching, have chosen to leave the industry and that is because they don’t believe that we are going to be able to in the future get our product to tidewater. They have the ability to sell their stocks today, take their investment dollars, and invest anywhere in the world. They make investments where companies get the best prices for their commodities. We believe 69 will be the end of the future growth of commodities being able to get to tidewater.

Mike [Rose] said, we believe we have some of the most responsible energy ever produced anywhere in the world. If we are true environmentalists, if we really care about the world’s environment, than Canadian energy should be sold everywhere in the world where we respect human rights, where we respect the environment, where we respect how we produce our energy. The places we want to sell that energy to… In addition, the world, we believe is energy starved and we needs to get that energy to places that have no water and have no electricity, and be able to help the other people in the world. It’s a much broader question. But to answer that, we believe Bill C-69 would be the end of any future growth in our industry.

Question

It seems like Canada’s natural resources have been positioned as dirty but doesn’t Canada have some of the strongest environmental regulations in the world?

Jeff Tonken, president/CEO, CAPP chair

Several years ago CAPP had an independent report done by a company called Worley Parsons and it was to address that exact issue. And the answer to that, after going to 72 different countries, is that we are the most highly regulated, the best environmentally friendly production.

What we believe is the federal government is positioning itself to let the energy industry die so that they can get votes to get re-elected. That would be the net of that answer.

We have spent, as Mr. Rose said, we spend significant money on the environment not because we have to do that, we do it because we believe in the environment. We believe in the environmental stewardship. We believe that all Canadians should be heard and we should be respectful of everything that everybody puts forward.

I bring into that the Indigenous communities. The oil and gas industry provides employment for Indigenous people, we provide health care, we provide education, we provide the opportunity for their future growth. And we work with them all of the time. All of the companies here have very specific relationships with different Indigenous groups, and yet we hear how badly the Indigenous people are being treated. You should

talk to the people here because they spend significant time with those people trying to listen to their concerns so that our industry can work together.

I think you’ll hear from different Indigenous groups in Monday who take the exact same position as us, which is Bill C-69 is considerably unacceptable to them because they’re not going to have any future growth either.

George Fink, CEO and chair, Bonterra Energy

I’d like to respond to the statement that you made with regard to the Prime Minister approving Bill C-69. There’s some conditions so that he never applies. It’s always got to be subject to Indigenous approval. The big ones are that is has to be for the good of all citizens of Canada, and it has to be subject to further reviews and studies that the federal government may have to make to justify this. Those conditions could take you forever to get that approval. When he says he’s giving approval it’s very qualified and guarded. He doesn’t have to go forward with anything. He could delay this for months and years.

Jeff Tonken, president/CEO, CAPP chair

Today we’re focused very much on Bill C-48 and Bill C-69. But I remind you, and I remind all Canadians, that this country got to a point where no one would invest in pipelines, as George… that was his point. So we ended up with the possibility of having one twinned pipeline called TMX, which may be announced on June 18.

But do not forget that we, Canadians, own that pipeline. Now we’re talking about the ability for ourselves to approve our own pipeline. This is not an independent company who has shareholders and investors, and has to live up to timelines and budgets, we find ourselves in Canada now, where we’re debating whether we, ourselves, can actually build our own pipeline. Not, as George is pointing out, about independent companies with shareholders and investors who can take the risk to build a future pipeline. We can’t even build a pipeline today.

Our position, under the new legislation, it’s even worse with respect to timelines, with respect to economic benefits… I don’t really want to get into everything that’s not in that Act, except that three of our amendments were included in the whole Act, and notwithstanding the rhetoric that comes from the federal government; it is our view that no future pipelines will be built.

Sue Riddell-Rose, president, Perpetual Energy

I think one of the most disturbing parts of what we’re experiencing today is that it’s really back to process and certainty. We are concerned about the lack of certainty that Bill C-69 in its current form actually would present for our industry, and we’re telling you that our investors would not participate. We have the government on the other side taking a stand saying the opposite.

In terms of process, we went to a full Senate review coast-to-coast-to-coast, getting input at an unprecedented level from Canadians from every sector – whether its industry interested in this Bill particularly, or people that were wanting to see different amendments. The Senate was actually very thoughtful in putting all of those

amendments together. They made a proposal to parliament, or to the House of Commons, and that was completely disregarded. And process like that is not going to move our country forward in the interests of Canadians, and that is what uncertainty is about.

Satoshi Abe, president, Japan Canada Oil Sands

My company is Japan Canada Oil Sands Limited. It has invested $2 Billion for the past 40 years. So we have 40 years history in this country, and we are currently producing 30,000 barrels per day with our joint venture partner. We are always proud to be part of the Canadian initiative, environmentally and socially responsible resource development. We are owned by Japan, Japanese investors. The Canadian oil resource industry, in general, has a good reputation in Japan.

Canada is highly thought of as a supplier of hydrocarbons to the export market. Despite this, Canada itself has created significant barriers to new investment. Additional investment in Canada will only become attractive once there is additional de-risk for its resources and improved certainty around the regulatory process. Without additional pipelines and market access, Canada’s resources will likely continue to sell at a steep discount to global prices, which is not good for Canadian people and making new investment extremely challenging.

Increasing regulatory hurdles and uncertainty simply adds to the challenges making Canada unattractive when compared to other jurisdictions. As a 14-year member of the Canadian energy industry, the current situation is very critical for our company.

Closing remarks

Tim McMillan, president/CEO, CAPP

That summarizes things very well. Thank you for your interest. Thank you for the united stance that our industry is taking on an important issue.”


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