Canada booted from world’s top 10 energy destinations

Canada has lost its place among the top 10 jurisdictions viewed by petroleum industry insiders as attractive for investing in oil and gas projects.

The Fraser Institute has released its 2018 Global Petroleum Survey, which polled 256 energy insiders and looked at 160 jurisdictions, including all provinces and territories in Canada except Nunavut and Prince Edward Island. Nine out of 10 jurisdictions named by petroleum industry executives and consultants were located in the US; not one spot went to Canada, making this the first year that the country did not get mentioned in the ranking.

“The takeaway for Canada is we’re becoming increasingly less attractive to invest in than our neighbours, practically across the street,” Ken Green, a co-author of the survey and resident scholar and research chair in energy at the Fraser Institute, told the Financial Post.

Alberta was recognized as a “large reserve holder” because it has the third largest oil and gas basin in the world. But among large reserve holders, survey respondents placed it third — behind Texas and Russia — in terms of its perception as a place to invest.

The survey also asked respondents questions on regulatory enforcement, trade barriers, and other areas of policy, which were boiled down into a single “Policy Perception Index” score for each jurisdiction.

While the underlying reasons behind the respondents’ scoring can’t be ascertained from the multiple-choice survey, Green inferred that regulatory issues have weighed on Alberta’s appeal as a place to invest, pushing its ranking down from 33rd overall last year to 43rd this year.

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“The concerns expressed by people are regulatory … It tends to be they’re concerned about the time it takes to weave through the regulatory forest,” he said.

Higher personal and corporate income taxes were also highlighted in the report as contributing factors for Alberta’s fall; the carbon tax, Green added, is another possible reason. But he identified the lack of a means to move oil as the most pressing problem that the province faces today.

“We’re congested. We’re hemmed in, and virtually everything we have is a drainage system right into the US,” he said, noting that the glut of oil in the US adds to the Canadian oil-price discount.

Fiscal terms — licenses, royalty payments, and gross revenue charges — were also considered by 30% of respondents as a mild deterrent to investment in Alberta; 20% said it was a strong deterrent, while 5% cited it as a reason not to invest. The rest said it was neither a factor nor an incentive.

Trade barriers were cited by 15% as a mild deterrent to investment in Alberta, and another 10% deemed it a strong deterrent; the rest were either neutral or saw it as an encouragement to investment.

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