29-04-2025
Oilpatch faces more frustration over federal environmental policies as Liberals take power again
There aren't many signs of optimism emerging from the Canadian oilpatch that a fourth-straight Liberal government in Ottawa will be a boon for energy development in Canada.
Distrust of the Liberals and longstanding frustration over the party's policies on energy, including the Impact Assessment Act (Bill C-69 or the 'no-more-pipelines act') and the federal emissions cap on oil and gas, appear not to have been alleviated by Mark Carney's campaign pledge to 'build Canada strong' with a renewed focus on the economy.
'I'm troubled by the fact that most of these things the prior administration put in place, Mark Carney has not committed to altering or changing. In fact, he's committed to standing behind some of these really damaging bills,' Precision Drilling Corp. chief executive Kevin Neveu said, noting Carney's addition of a carbon border adjustment mechanism to the existing stack of emissions policies.
'When you continue focusing on these border-based carbon policies and internal carbon policies, you're putting the climate agenda as a top policy priority, which I think is wrong-minded. Completely wrong-minded.'
A recent survey of energy executives and institutional investors suggests that Monday's election outcome doesn't bode well for oil and gas investment in the months and years ahead.
ATB Capital Markets' annual spring energy survey of about 60 executives from oil and gas companies and energy service providers, along with 40 institutional investors, said 73 per cent of them viewed a Liberal minority government as having a negative impact on their willingness to grow or reinvest in Canadian operations or equities, with 30 per cent considering it 'significantly negative.'
The survey was conducted last month, but the results were only released Tuesday because ATB's status as a Crown corporation limits what it can publish during the election period.
The Canadian oilpatch and its investors viewed a Conservative government as moderately or highly favourable to energy investment, according to the survey.
Federal energy and environmental policies ranked as the most pressing concern facing the Canadian energy sector for the sixth consecutive survey, ATB said. U.S. tariffs and Canada's reciprocal tariffs ranked behind access to capital on a list of the sector's top perceived risks.
'We do need to focus on sort of not doing damage to ourselves in this country,' Tristan Goodman, president of the Explorers and Producers Association of Canada, said. 'Federal policies have broadly not been constructive or positive in helping develop natural resources generally, not just in energy, but broadly in mining and other types of projects — they have been absolutely unhelpful and negative for all Canadians.'
CIBC Capital Markets analyst Dennis Fong on Sunday said Canada's current regulatory environment must change in order for the sector to grow.
Elongated timelines for project approvals, which cause significant budget overruns or cancellation of infrastructure projects in their entirety, could continue to drive Canadian midstream companies in particular to focus on the U.S. 'at Canada's expense,' he said.
'Unless there are significant changes to the existing approval process for major infrastructure, we find it difficult to see additional major investment being attracted to Canada,' Fong said in a note about the federal election.
Many in the industry say they aren't optimistic about the possibility of a new oil pipeline being built to tidewater.
'I haven't seen anybody in the pipeline industry raise their hand yet to say that they're committing resources to considering another pipeline,' Neveu said. 'I am slightly more optimistic that additional gas capacity will come on for transporting natural gas and liquefied natural gas.'
Investors and companies may also be less likely to take risks or deploy capital under an unstable minority government, analysts said, since such governments rarely last more than two years. That's a hurdle that may prove particularly relevant for proponents of decarbonization who had hoped to see the sector advance big carbon capture and storage projects such as the Pathways Alliance proposal in the oilsands.
Some have also said they're concerned about the potential policy uncertainty that could come from the Liberals being forced to seek the support of either the NDP or Bloc Québécois in order to remain in power.
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But others have expressed some hope of a thawing in relations with Ottawa under Carney's leadership, particularly in comparison to the hostilities that sometimes showed under former prime minister Justin Trudeau.
'He has clearly backed off the overt warfare and the vocal opposition to oil and gas,' Advantage Energy Ltd. chief executive Michael Belenkie said. 'He recognizes that the crisis of confidence that (Donald) Trump sort of pushed us into requires that we probably don't shoot ourselves in the foot anymore when it comes to resource development.'
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