The federal government’s planned tax on corporate share buybacks is intended to encourage companies to “reinvest their profits in Canadian workers,” according to Deputy Prime Minister Chrystia Freeland.  But this doesn’t make sense for Canada’s oil and gas industry.  With programs like the Impact Assessment Act (formerly known as Bill C-69), Canada has created a regulatory environment where it is near impossible for oil and gas companies to invest in growing what they do best – producing the responsible, reliable energy the world needs. With higher oil and gas prices, Canadians are already benefitting from higher government revenues that help pay for social services like roads, schools, and hospitals.    

With more export oil and gas pipelines and liquefied natural gas (LNG) export terminals, the benefits across Canada would be even higher.   

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Fact: Canada’s oil and gas industry is committed to emissions reduction 

The federal government wants Canada’s oil producers to invest in reducing emissions. And they are.  

The Pathways Alliance of the six largest oil sands producers plans to spend $24.1 billion on emissions reduction by 2030 as the first step on their joint path to net zero emissions by 2050.  

This includes approximately $16.5 billion of investment by 2030 on one of the world’s largest carbon capture and storage (CCS) projects, and $7.6 billion on other emissions reductions projects. 

Canada’s oil sands producers are already successfully reducing emissions per barrel, achieving a decrease of 20 per cent between 2009 and 2020, according to IHS Markit. Reductions in total emissions – not just emissions per barrel – are expected to go down within the next five years.  

Through Pathways, Canada’s oil sands is the only major oil basin where producers have jointly committed to reach net zero. That’s great news for the world, given that oil demand is growing and expected to stay strong through 2050.  

Even with the rise of renewable energy, the International Energy Agency (IEA) expects world oil demand will increase from 94.5 million barrels per day in 2021 to 102 million barrels per day in 2030. By 2050, the IEA projects demand will still be 102 million barrels per day.  

GLJ

Fact: Canadians already benefit from higher oil and gas prices 

The federal government wants Canadians to benefit from higher oil and gas prices. And they are.  

Across the country, royalties are paid to provincial governments on a “sliding scale” that increases when the price of oil and gas does. 

In Alberta’s oil sands, for example, most projects are separated into pre- and post-payout royalty categories, determined by whether the project has recovered its initial capital costs.  

For a pre-payout project, the royalty rate is 1 per cent of gross revenues at oil prices up to $55 per barrel. When prices increase to $120 per barrel or higher, the royalty rate rises to 9 per cent.  

For a post-payout project, the oil sands royalty rate is 25 per cent when oil is $55 per barrel or less. When it rises to $125 or more, the rate increases to 40 per cent. The rate rises gradually between $55 and $120. At $80, for example, projects must pay the government royalties at 30 per cent of gross revenues.  

With higher prices, Alberta’s bitumen royalties are now expected to reach $20.1 billion this fiscal year, up by $9.7 billion or 94 per cent compared to February’s provincial budget. The increase is in part because higher oil prices are helping projects reach the payout royalty phase more quickly.  

Across Canada, oil and gas companies are expected to pay about $50 billion in royalties and taxes this year, according to research by both RBC Capital Markets and Peters & Co.  

That’s about 200 per cent more than in 2021 because of higher prices. And it’s equivalent to more than two-thirds of the funding for all of Canada’s hospitals last year. 

Canadians – and the world – benefit from a strong and growing Canadian oil and gas industry. The federal government would do more to increase prosperity by allowing and encouraging the sector to thrive.