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EXECUTIVE
SUMMARY
            Most (70%) oil sands            The profit rate of the Big      Despite record profits,       Reclamation of the oil
            production is owned by          Five oil sands companies—       hefty dividends to            sands, conventional oil and
            foreign companies and           Suncor, CNRL, Cenovus,          shareholders and              gas wells, and pipelines
            shareholders, who enjoy         Imperial Oil and Husky          skyrocketing pay raises       in Alberta will cost an
            the majority of record          Energy— through the first       for oil company CEOs,         estimated $260 billion
            profits, especially when        three quarters of 2019 was      subsidies for Canada’s        and take as many as 3000
            oil prices are low. Foreign     14.2%, almost double the        already heavily subsidized    years to complete. Past
            controlled operational profit   Canadian industry average.      oil industry have increased   experience and growing
            doubled from 31.6 to 58.4%                                      by billions of dollars over   market risks make it
            between 2012 and 2016, 3.5                                      the last five years.          increasing likely that future
            times the economy-wide                                                                        taxpayers will have to foot
            average.                        This allowed the Big Five                                     the bill.
                                            to transfer $8 billion
                                            to their mostly foreign         Despite increasing oil
                                            shareholders in the             production, technological
                                            first three quarters of         improvements,                 A recent poll indicates
                                            2019, which almost puts         modularization of             that the vast majority of
                                            them on pace to match           construction and an           Albertans agree that there
                                            their 2018 total of $11.34      estimated 58% decrease in     is a better way forward.
                                            billion. In 2018, the Big       capital spending from 2014    Almost 80% of Albertans
                                            Five transferred $6.97          through 2019 led to the       believe the province
                                            billion to various levels of    termination of 53,000 jobs    should transition toward
                                            government in the form of       in the Canadian oil and       renewable energy, and
                                            taxes, fees, and royalties.     gas industry, jobs that are   more than 90% think the
                                                                            never coming back.            government needs to do
                                                                                                          more to encourage the
                                                                                                          technology sector. Perhaps
                                                                                                          most surprising, a majority
                                                                                                          wants to transition away
                                            Methodology                                                   from oil and gas.

                                            This report is based on data from Statistics Canada, oil
                                            companies’ annual and quarterly reports and data obtained
                                            from Bloomberg terminal.

                                                                                                                                   2
                                                                                                                                          1
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Recommendations
                    While we need to                                        Government policy,              Canada cannot achieve
                    acknowledge and address                                 including stimulus money        net-zero by 2050 while
                    the tragic consequences of                              and industry bailouts,          supporting increased
                    the COVID-19 pandemic,                                  should invest in the future,    production of oil and
                    it’s also clear that the                                not the past. This includes     gas. Future stimulus

                                                                                                                                          “
                    unprecedented public                                    supporting unemployed oil       must support industries
                    investment needed to                                    and gas and other Canadian      and projects that
                                                                            workers and investing in a
                    rebuild the Canadian and
                    Alberta economies is a                                  diversified, clean-energy
                                                                                                            decrease greenhouse
                                                                                                            gas emissions, increase
                                                                                                                                            I keep trying to see who
                    once-in-a-generation                                    economy that will provide       economic diversification          the beneficiaries are….
                    opportunity to position                                 employment opportunities        and provide workers with
                    Canada to compete and                                   and public services in the      retraining opportunities.     It is not the people of the
                    prosper in the twenty-first
                    century economy.
                                                                            long-term.
                                                                                                                                              province, because they
                                                                                                                                                  are not getting the
                                                                                                                                             royalty return that they
                    T
INTRODUCTION

                         he global COVID-19                                 Even before the world was       other studies have revealed            should be getting.
                         pandemic has devastated                            turned upside down by           that the majority of
                    the global economy and                                  the first global pandemic       liabilities, now estimated                     Premier Peter Lougheed1
                    plunged the price of oil to                             in a century, the oil and       at $260 billion and rising,
                    record lows. By April 19, the                           gas industry in Canada –        are not only staying in the    At a time when every corner
                    price of Western Canada                                 despite rising production       country but are falling to     of the Canadian economy is
                    Select, Alberta’s benchmark                             levels – was cutting jobs       the taxpayers as companies     reeling from the disruption
                    crude, went negative for                                and paying less in royalties    abandon wells and tailings     caused by the COVID-19
                    the first time ever, and is at                          while demanding higher and      ponds leak into our rivers     pandemic and the country
                    the time of writing selling                             higher subsidies. For many      and waterways.                 struggles to reign in rising
                    at $4.23/barrel on the                                  years, industry lobbyists and                                  greenhouse gas emissions
                    futures market. 2 As a result,                          spokespeople have argued        Canada’s and Alberta’s         from the oil and gas sector,
                    oil sands companies have                                that increased support and      long-term interests are        it’s important that we
                    begun cutting dividends                                 greater subsidies were fair     not being served by            understand who benefits
                    and spending, and analysts                              because we all benefit from     governments that prioritize    from the expansion of the oil
                    expect production to be                                 the oil and gas industry.       the profits of foreign-        and gas industry in Canada
                    curtailed by as much as                                 While Canada has enjoyed        owned corporations and         and who is left footing the
                    25%, potentially causing                                many benefits of the oil        the interests of their         bill for clean up.
                    permanent damage to                                     and gas industry, this          shareholders ahead of
                    reservoirs and jeopardizing                             investigation reveals that      the long-term interests
                    billions of dollars in assets.3                         the majority of profits from    of Canada’s workers,
                                                                            the industry are leaving the    environment and economy.
                                                                            country. Simultaneously,
 1
  https://thetyee.ca/Opinion/2012/09/17/Radical-Peter-Lougheed/
 2
   https://oilprice.com/oil-price-charts/
3
  “Canada cuts steam-driven oil projects, risking permanent damage.” Reuters, April 19, 2020.
   https://www.reuters.com/article/global-oil-canada/canada-cuts-steam-driven-oil-projects
   -risking-permanent-damage-idUSL1N2C4050                                                                                                                                    2
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Majority of the Oil Sands
                          is Foreign Owned
                          Most oil sands production is not owned by Canadians.

                         Ten of the 14 publicly traded
                         companies invested in the oil sands                                 Although several major international            American interests own more than
                         are headquartered in Canada, but                                    oil companies (IOCs) have pulled $30            52% of oil sands production, more
                         only two of those are majority                                      billion out of the oil sands over the           than twice Canadian shareholders and
                         owned by Canadians: Athabasca Oil                                   last five years, foreign ownership of oil       more than all other non-US investors
                         Corporation (89%) and Pengrowth                                     sands production still tops 70%. This           combined. If any one group is calling
                         Energy (91%). Together they account                                 is because of increased investment              the shots in Alberta and profiting
                         for just 1.5% (50,000 bpd) of oil                                   by Chinese national oil companies,              from the rapid liquidation of our
                         sands production. Average Canadian                                  which now control 5.2% of oil sands             bitumen, it’s American investors.
                         ownership of the other eight                                        production, 3.5 times more than
                         “Canadian” companies is just 18.8%. 4                               majority Canadian-owned companies.

                                                                                                                                                                       barrels Per Day
                                                                                     % of Canadian Shares                  % of Non Canadian Shares                         (bpd)

                                                    PetroChina
BENEFITING?

                                                                             2                                                                                    98       35,000
                                                  Company Ltd

                                                ConocoPhillips               3                                                                                    97       150,000

                                                  Husky Energy               3                                                                                    97       80,000

                                                         CNOOC               3                                                                                    97       72,000

                                                         Sinopec             3                                                                                    97       33862.5

                                                     Connacher               3                                                                                    97       20,000
                                                      Oil & Gas
WHO IS

                                                    Imperial Oil                 6                                                                                94      400,000

                                               Cenovus Energy                                         28                                                          72      390,000

                                                    MEG Energy                                              31                                                    69       80,000

                                                 Suncor Energy                                                   34                                               66       985,275

                                             Canadian Natural                                                         45                                          55       826,500
                                            Resources Limited

                                           Athabasca Oil Corp                                                                                         89          11       32,000

                                            Pengrowth Energy                                                                                           91         9        18,000

  Data from Statistics Canada, “Foreign-controlled enterprises in Canada”:
                                                                                                                                                                                         3
 4

 https://www150.statcan.gc.ca/t1/tbl1/en/cv.action?pid=3310003301
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Foreign
                                 Investers Enjoy
                                 Record Profits
                                 Foreign shareholders own almost
                                 half (44%) of the $645 billion in
                                 oil sands assets, 2.7 times the
                                 economy-wide average. While
                                 Canadian control of total operating
                                 revenues has increased from
                                 51.5% in 2012 to 59.9% in 2016, the
                                 percentage of total operational profit
                                 has decreased from 68.4% to 41.6%
                                 over the same period. At the same
                                 time, foreign controlled operational
                                 profit has nearly doubled, from 31.6%

                                                                                                                                                                                    photo by GARTH LENZ
                                 in 2012 to 58.4% in 2016—3.5 times
                                 the economy-wide average. Which
                                 means more and more of the profit is
                                 being sent out of Canada.
BENEFITING?

                                Extraordinary
                                Profits for the
                                Big Foreign Five
                                A small number of large, integrated                               2018 annual total of $140 billion by    profit margin for all industries in
WHO IS

                                oil companies dominate oil sands                                  the end of the year; their aggregate    Canada in 2016 was 7.8%, which
                                production and upgrading. In early                                net earnings were $15 billion, more     makes these firms extraordinarily
                                2019, the Big Five—Suncor, CNRL,                                  than double their entire 2018 total,    profitable.
                                Cenovus, Imperial Oil and Husky                                   and their assets were worth more
                                Energy—were all majority owned                                    than $286 billion, almost as much       This allowed the Big Five to transfer
                                by foreign investors. Together,                                   as Alberta’s average annual gross       $8 billion to their mostly foreign
                                they control approximately 60%                                    domestic product (about $300            shareholders in the first three
                                of bitumen production and 90% of                                  billion).                               quarters of 2019, which almost puts
                                bitumen upgrading capacity.5                                                                              them on pace to match their 2018
                                                                                                  The average profit rate for the Big     total of $11.34 billion. By comparison,
                                Through the end of September 2019,                                Five through the first three quarters   in 2018, the Big Five transferred
                                the Big Five’s aggregate revenue was                              of 2019 was 14.2 percent, with Suncor   $6.97 billion to various levels of
                                $105 billion, on pace to match their                              and CNRL earning profits of 17.8%,      government in the form of taxes,
                                                                                                  and 26.7%, respectively. The average    fees, and royalties.

                                                                                                                                                                                                 4
5
 Data on the Big Five was sourced from their 2018 annual reports, 2019 third quarter reports and each
firm’s annual Extractive Sector Transparency Measures Act (ESTMA) disclosures.
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Increasing Subsidies
                                Fuel Record Profits
                                 Despite record profits, increasing
                                 dividends to shareholders, and
                                 skyrocketing pay raises for oil
                                 company CEOs,6 subsidies for
                                 Canada’s oil industry have
                                 continued to increase.

                                 In 2014, the last time the Saudis
                                 and their OPEC partners increased
                                 production and brought the global
                                 price of oil to below US$50/barrel,
                                 Canadian and Alberta governments
                                 responded by increasing subsidies,
                                 tax breaks and handouts for the oil
BENEFITING?

                                 sector. This is an industry that was
                                 already subsidized to the total of $3.3
                                 billion a year by Canadian taxpayers.

                                 When oil prices fell again, in 2016
                                 and 2018, the federal government
                                 not only gave Alberta oil producers
                                 a $1.6-billion bailout package, they
WHO IS

                                 also spent $4.5 billion buying the
                                 Trans Mountain pipeline, an expan-
                                 sion project now estimated to cost
                                 taxpayers over $16 billion.

                                                                                                                                  photo by GARTH LENZ
                                 In 2019, amid a budget crisis for
                                 the ages, the Alberta government
                                 reduced its corporate tax rate from 12
                                 to 8%, a boon that will reward the Big
                                 Five oil sands companies a $4.3 billion
                                 through 2022.7

6
 “Canada’s biggest energy companies raised executive pay and bonuses in 2019.” Globe and Mail, April 10, 2020.
https://www.theglobeandmail.com/business/article-canadas-biggest-energy-companies-raised-executive-pay-and-bonuses-in/
 Data from companies’ second quarterly in 2019, as reported by Press Progress: https://pressprogress.ca/ucps-corporate-tax-cut-
                                                                                                                                                        5
7

likely-to-let-five-companies-alone-reduce-public-revenues-4-3-billion/
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Future
                                                                                                                   Generations
                                                                                                                   of Taxpayers

                                  The Alberta                                                                      Numerous financial
                                                                                                                   experts have warned that
                                                                                                                                                  system for monitoring
                                                                                                                                                  liabilities,11 and Premier
                                  Workforce                                                                        international action on
                                                                                                                   climate change, ever-cheaper
                                                                                                                                                  Kenney just provided an
                                                                                                                                                  additional $100 million
                                                                                                                   clean-energy alternatives,     loan to the Alberta Orphan
                                   The economic downturn                           53,000 jobs in the              and increasing market risks    Well Association, which
                                   could see unemployment                          Canadian oil and gas            for dirty hydrocarbons will    now totals $335 million.
                                   in Alberta reach as high                        industry. Because               soon turn once profitable      In a bid to employ laid-off
                                   as 25%, but the crisis was                      overall productivity per        energy projects into           workers, clean up orphaned
WHO DOESN’T

                                   well underway before the                        employee has increased          stranded assets that could     wells, and reduce methane
                                   COVID-19 crisis began.                          dramatically, these lost        leave behind billions of       emissions, the federal
                                                                                   jobs are not coming             dollars in environmental       government recently
                                   The oil and gas industry                        back.9                          liabilities.                   announced what amounts
                                   is one of the most capital                                                                                     to a further $2.4 billion
                                   intensive sectors in the                        Even the Alberta                Reclamation of the oil sands, subsidy to the oil and gas
                                   world. While well-paid                          government tax cuts             conventional oil and gas       industry,12 more evidence
                                   employment opportunities                        haven’t halted the              wells and pipelines in Alberta that once foreign oil
BENEFIT?

                                   skyrocketed during the                          shedding of oil industry                                       companies walk
                                                                                                                   will cost an estimated $260
                                   oil sands’ growth phase                         jobs. Soon after receiving                                     away, future genera-
                                                                                                                   billion and take as many as
                                   (2000-2018), there will be                      $233 million from the tax                                      tions of taxpayers
                                                                                                                   3000 years to complete,
                                   far fewer jobs available in                     breaks, Husky Energy laid       $200 billion more than what will have to pay to
                                   the future.8                                    off hundreds of workers;                                       clean up the mess
                                                                                                                   has been publicly acknowl-
                                                                                   Encana, a Canadian fossil                                      they left behind.
                                   However, technological                                                          edged.10 Cleaning up the
                                                                                   fuel giant, took a $55
                                   improvements, modulari-                                                         mess left behind in the oil
                                                                                   million cut from Premier
                                   zation of construction                                                          sands, including some of the
                                                                                   Kenney before relocating
                                   and an estimated 58%                                                            largest tailings ponds in the
                                                                                   to the United States.
                                   decrease in capital                                                             world, accounts for half this
                                   spending from 2014                                                              cost.
                                   through 2019 led to
                                                                                                                   Alberta has collected only
                                   the termination of
                                                                                                                   $1.6 billion in security funds
                                                                                                                   because of a deeply flawed

8
 Based on data from Petroleum Labour Market Information: https://
careersinoilandgas.com/what-is-lmi/labour-outlook/
9
 Hussey, Ian. “THe Future of Alberta’s OIl Sands Industry.” 2019. Parkland Institute.
https://www.parklandinstitute.ca/the_future_of_albertas_oil_sands_industry.
 Rob Wadsworth, vice-president of closure and liability,
10

Alberta Energy Regulator, as reported widely in November 2019.
 Ibid.
11

 “Orphan wells cleanup funding 'a subsidy to industry,' says Alberta farmer.”
12

CBC. April 17, 2020. https://www.cbc.ca/radio/asithappens/as-it-happens-friday-
edition-1.5536035/orphan-wells-cleanup-funding-a-subsidy-to-industry-says-alberta-
farmer-1.5536478.
                                                                                                                photo by MARC BRUXELLE via shutterstock
                                                                                                                                                                                6
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CONCLUSION:
                          The Oil Sands are no longer
                          in our National Interest.
                          Alberta’s oil and gas industry has                                Alberta’s and Canada’s workforce,
                          always been a roller coaster, but its                             environment and economy. While we
                          future is more uncertain than ever.                               need to acknowledge and address the
                          Even before the COVID-19 pandemic                                 tragic consequences of the COVID-19
                          disrupted the global economy,                                     pandemic, it’s also clear that the
                          twenty-first century market forces                                unprecedented public investment
                          were enticing an increasing number                                                                       A recent poll indicates
                                                                                            needed to rebuild the Canadian and
                                                                                                                                   that the vast majority of
                          of corporations, investment funds                                 Alberta economies is a once-in-a-
                                                                                                                                   Albertans agree there is a
                          and insurance companies to pull out                               generation opportunity to position     better way.
                          of the oil sands, and the Big Five was                            Canada to compete and prosper in the
                          squeezing costs and slowing down                                  twenty-first century economy.          Almost 80% of Albertans
                          investment. A growing number of                                                                          believe the province should
                          energy analysts agree that the current   Government policy, including stimulus                           transition toward renewable
                          economic crisis will permanently         money and industry bailouts, should                             energy, and more than 90%
                          reshape the Alberta economy.             invest in the future, not the past. This                        think the government needs
                                                                   includes supporting unemployed oil                              to do more to encourage
                          In response, the Alberta government      and gas and other Canadian workers                              the technology sector.
                          continues to ignore the market realities and investing in a diversified, clean-                          Perhaps most
                          of a warming world by propping up the energy economy that will provide                                   surprising, a
                          oil industry with policies that reward                                                                   majority wants
                                                                   employment opportunities and public
                                                                                                                                   to transition
                          foreign-owned oil companies and          services in the long-term. Canada                               away from
                          foreign investors and demonize citizens cannot achieve net-zero by 2050 while
                                                                                                                                   oil and gas.
                          who advocate for a better long-          supporting increased production of oil
                          term future based on clean energy,       and gas. Future stimulus must continue
                          responsible climate policy, and greater to support industries and projects that
                          support for unemployed workers.          decrease greenhouse gas emissions,
                                                                   increase economic diversification
                          It’s time to stop prioritizing the       and provide workers with retraining
                          profits of foreign-owned corporations opportunities.
                          and the interests of their shareholders
                          ahead of the long-term health of

 “CBC News poll: Why the economic crisis could speed up transition to renewable energy.” CBC, April 16, 2020.
                                                                                                                                                                   7
13

https://www.cbc.ca/news/canada/calgary/cbc-news-poll-energy-transition-support-1.5533036
                                                                                                                                             photo by GARTH LENZ
designed and illustrated by JASMINE SALLAY-CARRINGTON
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