The Canadian Petroleum Industry is languishing at activity levels far below capacity. While the late 70's were an overheated period, few will argue that the current situation is healthy. In fact, considerable opportunity is being lost for a significant contribution to the Canadian economic recovery and beyond.
The past decade has witnessed some dramatic changes in the global petroleum scene that have caused governments worldwide to react. The resulting situation in Canada provides neither the reward for success necessary to spur investment nor the cash flow to finance such efforts. Canadian companies face some unique challenges in seeking appropriate revisions.
There is no Simple, Single, specific solution to these problems. Current policies were conceived and implemented during a period of high and rising prices, demand and inflation. Abrupt changes have occurred in all these areas, yet the basic policies remain essentially unchanged with numerous "adjustments" occurring on an ad hoc and unpredictable basis. There is a crying need to reassess the overall situation and this paper, hopefully, makes a worthwhile contribution to the ongoing discussions necessary to produce positive, efficient and fair results.
Recently, it has become fashionable to analyze Oil and Gas Policy in Canada because years of political squabbling, and the occasional agreement, have created an environment wherein tightening world market conditions have caused the industry to languish at activity levels far below capacity. Considerable opportunity is being lost for a significant contribution to the Canadian economic recovery and beyond. The bottom line problem becomes "How much is enough?" In the iterative search for the answer to this rhetorical question, each and every attempt at policy analysis makes a contribution toward a solution. The author has had substantial opportunity to participate in this exercise, primarily with the Canadian Petroleum Association and the internal efforts of Norcen Energy Resources Limited, but also directly and indirectly in many other ways as, I'm sure, have most readers. This paper attempts to consider the situation from a "Canadian" perspective. The ideas expressed have come from a variety of sources. Credit for the good suggestions must go to the many who have shaped them while blame for the bad belongs to the author.
In the past decade, the Petroleum Industry has undergone some dramatic changes. The politics and economics of virtually all parts of the world have been influenced by, or have influenced these developments. Canada has certainly not been immune. Who, what, where, when or why things went astray is not really the issue. How they can best be repaired should be the main concern.
There are a myriad of Oil and Gas Policy items that make up today's Canadian environment. Unfortunately, it is not always apparent that a logical target is sought. Surely, aggressive oil and gas resource development to secure supplies and provide economic benefits must be a basic objective. A fiscal regime to encourage this effort is also a fundamental necessity. Such a combination would undoubtedly lead to a greater Canadian presence in the Industry.
