The oil and gas sector in Canada has been through some challenging times in recent years, making investment in the sector nowhere near what it used to be.
A new report released on Thursday by the Fraser Institute, an independent Canadian public think-thank, indicates just how bad that’s become.
The 2018 Global Petroleum Survey said no Canadian province ranked in the top 10 most-attractive jurisdictions for oil and gas investment for the first time in more than five years. The annual survey of petroleum-sector executives also found that Alberta and British Columbia, for the second straight year, were the least-attractive jurisdictions in Canada.
“Onerous regulations, higher taxes and a lack of pipeline capacity are taking their toll on Canada’s energy sector, and as a result, investors are looking elsewhere to invest,” said Kenneth Green, resident scholar and research chair in energy and environmental studies at the Fraser Institute and co-author of the report.
“Investors are saying very clearly they prefer the competitive taxes and regulatory regimes of the energy-producing American states over Canadian jurisdictions,” said Ashley Stedman, Fraser Institute senior policy analyst and study co-author. “Policy-makers at the federal and provincial levels must be aware of the impact their decisions have on attracting or deterring valuable investment dollars.”
According to the survey, B.C. was the lowest-ranked Canadian province at 58th (out of 80) on the Policy Perception Index, a comprehensive measure of the extent policy deters oil and gas investment. The report said 80 per cent of respondents cited the high costs of regulatory compliance in B.C., and 81 per cent cited political instability in the province as deterrents to investment.
“Alberta ranked 43rd this year – a significant drop from its 2014 ranking of 14th worldwide – and the province continues to decline in investment attractiveness. Specifically, almost 60 per cent of survey respondents cited Alberta’s high taxes, and more than 70 per cent cited Alberta’s high cost of regulatory compliance as deterrents to investment,” said the Fraser Institute.
“Elsewhere in Canada, Manitoba (16th overall) was the top-ranked province followed by Saskatchewan (18th, down from seventh last year). Newfoundland and Labrador, which ranked fourth globally last year, dropped to 26th this year.
“South of the border, nine U.S. states rank in the top 10 including Texas, Oklahoma, Kansas, Wyoming, North Dakota, Alabama, Montana and Louisiana.”