CALGARY – The president of one of Canada’s biggest oil and gas producers says he doesn’t believe Alberta’s NDP government is out to hurt the industry as it prepares to review royalties and revamp environmental regulations.
But Steve Laut, with Canadian Natural Resources Ltd. (TSX:CNQ), warned damage could still be inflicted, especially when there are so many changes happening at once.
“We’re assuming that the royalty, regulatory and environmental burdens will be reasonable, allowing for investment and job creation,” Laut told a conference call to update investors on the company’s strategy.
But, he said, “adjusting the royalty, taxation and regulatory burdens is complex and the risk of getting it wrong is high.”
The call was held in lieu of Canadian Natural’s annual day-long investor open house event, which the company delayed last month. By way of explanation, Canadian Natural said at the time that with royalties and environmental rules up in the air, it couldn’t lay out long-term spending plans for shareholders.
In an interview, Laut denied that Canadian Natural was aiming to send a message to Alberta’s new left-leaning government with the move.
“It’s hard for us to tell investors where we’re going to invest our money and which projects are going to be developed and which ones are the best if we don’t know the regulatory and fiscal regime going forward,” said Laut.
He added he’s met with Energy Minister Marg McCuaig-Boyd. And Premier Rachel Notley has spoken to Canadian Natural chairman Murray Edwards, an influential oilpatch financier.
“The conversations we’ve had with the government to date, as well as the public statements that they have made, lead us to believe the government will be pragmatic when they address the issues up and coming and they made it clear that they want a strong and viable oil-and-gas industry, and it’s important to all Albertans and Canadians,” said Laut.
But the last Alberta royalty review in 2007 and a U.K. tax increase in 2011 serve as cautionary tales. In the U.K., for instance, Laut said the industry may have been irreparably harmed by the changes, even though the government has since reversed course on many of them.
“We don’t think (the NDP) want to see job losses out of this whole thing. And I think that’s the important thing,” said Laut.
“We can easily get to a tipping point here and go into a spiral where you lose revenue, you lose jobs and actually get yourself in a worse position. I don’t think they want to do that. They’ve learned from the last government and the last royalty review what happened there.”
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