Chris Montgomery of the Canadian Association of Petroleum Producers (CAPP) spoke to the Battlefords Rotary Club and Chamber of Commerce members during his presentation Monday. (Angela Brown/battlefordsNOW Staff)

By Angela Brown

Eye on the economy

CAPP gives Rotary and Chamber update on state of oil industry

Aug 26, 2019 | 4:48 PM

The Rotary Club Of The Battlefords and the Battlefords Chamber of Commerce had an opportunity to hear about the state of the oil and gas industry during a luncheon talk Monday.

Chris Montgomery, manager of exploration and production with the Canadian Association of Petroleum Producers, who is based in Calgary, spoke to attendees about the current difficulties oil producers face.

“Our biggest challenge is accessing markets,” he said. “We need additional pipelines in the country.”

Montgomery said three proposed pipeline projects – Keystone XL, Enbridge Line 3 Replacement, and the Trans Mountain Pipeline Expansion – will allow the industry to transport oil to reach more markets, but long-term delays in starting these initiatives have been a hindrance.

“Our future growth as an industry is almost entirely dependent at this point in our ability to build additional pipeline capacity so we can reach markets with our oil,” Montgomery said.

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There is a global demand for more oil but because Canada is lagging in having sufficient access to reach markets, it is more difficult for it to stay competitive, he said.

There is an oversupply of oil within Canada as existing pipelines are already being used to maximum capacity and storage is full, he said.

As a result, Alberta has imposed a cap on oil production due to delays in the pipeline projects.

“The Alberta government stepped in to help out the economics of the industry,” Montgomery said. “It’s not an ideal situation. Our preference would have been to have pipelines in the ground so we could have let that oil flow to market.”

He said the delays with the three proposed lines being built is causing frustration in the industry.

“That’s our biggest complaint right now; we have a regulatory system in place that takes far too long to get these projects approved,” Montgomery said.

For oil production in Saskatchewan, CAPP’s main concern is around municipal taxes and fees.

“It is creating a competitive disadvantage for Saskatchewan compared to other jurisdictions in Canada,” Montgomery said. “We have some concerns too about how they are being implemented.”

CAPP is also concerned about Bill C-69 causing regulatory constraints for the industry. He said the bill which was adopted this spring “makes it much more challenging for future pipelines to be built.”

Montgomery said if the three proposed pipeline projects are completed the industry would still need more pipeline capacity 15 years from now to meet the market demand.

“If we have a regulatory system that has made it difficult to get these projects built, now in our view we have another system that is going to make it more challenging,” he said.

One of the attendees at the North Battleford event asked about regulatory issues involving pipelines and court challenges facing the proposed projects.

Montgomery said the situation ultimately creates a great deal of uncertainty for business.

“Obviously, the local economy here in North Battleford is dependent, in part at least, on the oil and gas sector,” he said. “We have a lot of oil-field services here. So their future is in a large part dependent on the future of the oil and gas industry. If we are going to grow, we need new pipelines.”

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angela.brown@jpbg.ca

On Twitter: @battlefordsnow