Varcoe: Oilpatch CEOs say Canada falling behind U.S. in competitiveness race

Varcoe: Oilpatch CEOs say Canada falling behind U.S. in competitiveness race

Wakey-wakey, Bill Morneau.

More money is flowing through the energy investment pipeline into the United States, while Canada isn’t yet ready to mount an aggressive campaign to attract capital here.

A new Statistics Canada report shows spending by oil and gas companies across the country will fall by 12 per cent this year to $33 billion, far off the $76-billion mark seen four years ago when commodity prices were riding high.

In Alberta, a similar 12 per cent decline is projected this year as spending on oilsands and conventional oil and gas tails off, and producers do more with less money.

Canada is now facing a teeter-totter effect.

Promising energy plays and tax reform are making the U.S. a more attractive place to invest. On the other side, pipeline constraints and the discount facing oil and natural gas prices in Alberta are beginning to pinch.

The heads of three of Canada’s largest petroleum producers say the country is falling behind.

“It is hard to not be concerned about Canada’s competitiveness right now,” Husky Energy CEO Rob Peabody said Thursday.

“Hopefully we’ll wake up to the situation and we’ll start taking some action to remedy it.”

Similarly, Canadian Natural Resources vice-chairman Steve Laut voiced concern that regulatory uncertainty and tax changes are tipping the scales.

“Clearly the U.S. has changed the structure, and they are clearly more competitive when it comes (to) a tax point of view. That does give them a cost of capital advantage,” he said in an interview.

“You actually see capital flow to the U.S. (from) Canada. They have regulatory advantages as well.

Promising energy plays and tax reform are making the U.S. a more attractive place to invest. On the other side, pipeline constraints and the discount facing oil and natural gas prices in Alberta are beginning to pinch.

The heads of three of Canada’s largest petroleum producers say the country is falling behind.

“It is hard to not be concerned about Canada’s competitiveness right now,” Husky Energy CEO Rob Peabody said Thursday.

“Hopefully we’ll wake up to the situation and we’ll start taking some action to remedy it.”

Similarly, Canadian Natural Resources vice-chairman Steve Laut voiced concern that regulatory uncertainty and tax changes are tipping the scales.

“Clearly the U.S. has changed the structure, and they are clearly more competitive when it comes (to) a tax point of view. That does give them a cost of capital advantage,” he said in an interview.

“You actually see capital flow to the U.S. (from) Canada. They have regulatory advantages as well.”

Much attention has focused recently on the potential impact of U.S. tax reforms, dropping corporate tax rates to 21 per cent from 35 per cent. As well, the Americans have increased the pace of capital expense write-offs for machinery and equipment.

Business groups and corporate leaders were hoping Finance Minister Morneau would address these challenges in the federal budget on Wednesday, but were left disappointed.

Asked what the budget would do to make Canada’s energy sector more competitive, Crescent Point Energy CEO Scott Saxberg was blunt.

“Not much,” he said Thursday. “The understanding of competitiveness, obviously with this budget and just in general, hasn’t got to the federal level yet

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