A survey of oil and gas executives, oilfield service companies and industry investors highlights the sector’s opportunities for growth — and concerns about federal policies such as Bill C-59
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New federal legislation aimed at greenwashing, Bill C-59, remains on the minds of Canada’s oil and gas industry heading into the fall.
So is the startup of the LNG Canada project, and its partners potentially moving forward with a second phase. The new development on the Pacific coast is preparing for commercial operations next year.
A survey of oil and gas executives, oilfield service companies and industry investors highlights the sector’s opportunities for growth — and concerns about federal policies such as Bill C-59 and its effect on deterring discussion about decarbonization initiatives.
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“We’re deeply concerned about Bill C-59 and its impacts, particularly on civil liberties and environmental transparency,” Alberta Energy Minister Brian Jean said in an interview Thursday.
“It’s counterproductive . . . They should scrap the bill.”
Bill C-59, passed earlier this summer, includes changes that require companies to be able to back up environmental claims. It potentially imposes large penalties for infractions.
The Alberta government has maintained that it’s intended to prevent the industry from defending itself and discussing its actions to lower greenhouse gas emissions. Companies are seeking clarity on new standards contained in the bill.
“It feels like the intent is to put fear into us with the consequences. And so then that just shuts down the dialogue — and it’s a really important dialogue,” said Sue Riddell Rose, CEO of Rubellite Energy and Perpetual Energy.
“How are we going to get energy policy and environmental policy — and how the two of them are interconnected — right, without the ability to actually inform the public and have dialogue in the public?”
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The survey by ATB Capital Markets of more than 100 industry leaders, conducted between the end of August and early September, paints a picture of a sector that expects modest growth for 2025, particularly as oil prices have recently been volatile.
The poll indicates Canadian oil and gas production is expected to increase by about five per cent next year, while capital spending will rise modestly and field activity levels will grow by an estimated three to five per cent.
Two-thirds of respondents expect U.S. benchmark natural gas prices to improve in the next 12 months, while 40 per cent expect West Texas Intermediate (WTI) crude oil prices to rise over the year — double the level of those who believe it will drop.
Meanwhile, 58 per cent of executives for petroleum producers view their six-month outlook as improving.
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“Canada is lining up for a continuation of a stable growth trajectory,” ATB analyst Tim Monachello said Tuesday.
“We expect to see production continue to grow in 2025, alongside crude egress and . . . initial exports of LNG in the first half of the year.”
Asked what’s the biggest catalyst for growth over the mid- to longer-term, industry leaders point to the expansion of the liquefied natural gas industry now being built on Canada’s West Coast.
An eye-popping 97 per cent believe Phase 2 of the LNG Canada project — the first phase is set to start up next year — will proceed. If built, the new phase would export an additional 1.6 billion cubic feet of gas per day out of Western Canada to Asia.
“The opportunity for growth is market egress — and to the extent that we have pipeline takeaway capacity out of Western Canada, we’re going to see our western Canadian gas industry grow,” said Riddell Rose.
“We’ve got LNG off the West Coast starting . . . there’s enough resource in Canada to support probably four or five LNG Canadas.”
However, asked to rank the biggest risks facing the sector over the next five years, the top was federal energy and environmental regulations and policies, followed by access to capital, respondents said.
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The study specifically delved into Bill C-59, which was passed by Parliament in June and included changes to the Competition Act.
It states companies can’t represent the benefits of their business activities for protecting or “mitigating the environmental and ecological causes or effects of climate change that is not based on adequate and proper substantiation, in accordance with internationally recognized methodology.”
Industry groups and the province have criticized the ambiguity about what an internationally recognized methodology will include, while the Alberta government says it’s an attempt to muzzle the industry. The burden of proof remains with the business to substantiate any claim.
The ATB survey found 82 per cent of producers view the bill as affecting their environmental reporting. The survey also indicated there are diminished intentions for investing in environmental technologies and ESG disclosure.
“The implication of C-59 are certainly perceived to shift the burden of proof to industry. So the risk and cost associated with disclosures has gone up,” said Monachello.
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“In fact, it may be discouraging investment, because it’s increased the risk profile around these investments.”
The Competition Bureau is conducting consultations on how the bill’s provisions will be interpreted, with feedback accepted until Sept. 27.
Industry executives say the bill has become a major issue.
“Anyone can go in Canada and accuse a company for any reason, and the burden is on the company to prove they’re not right,” said Tristan Goodman, head of the Explorers and Producers Association of Canada.
“This is a major topic of conversation within the industry. And it’s not just our industry. It actually is now going into other industries.”
Environmental groups say the industry shouldn’t be concerned as long as their assertions are correct.
“Bill C-59 is basically saying . . . if you make a specific environmental claim, it has to be true. This is not an unreasonable demand,” said Keith Stewart of Greenpeace Canada.
However, the Pathways Alliance group of oilsands companies said it has “serious concerns with the uncertainty created by the new anti-greenwashing provisions,” alliance president Kendall Dilling said in a statement.
“The changes open the door to potentially frivolous litigation that would be costly and time-consuming for companies to defend against,“ he added.
Chris Varcoe is a Calgary Herald columnist.
cvarcoe@postmedia.com
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