'Dog that got the car': Oilpatch is getting what it wanted, but will companies build?

详细摘要

Alberta Premier Danielle Smith has set a lofty goal of doubling oilsands output in the next decade, and industry players have said the idea of bringing new projects to the fore is becoming easier to stomach thanks to a raft of recent federal and provincial government policy changes.

CALGARY — Alberta Premier Danielle Smith has set a lofty goal of doubling oilsands output in the next decade, and industry players have said the idea of bringing new projects to the fore is becoming easier to stomach thanks to a raft of recent federal and provincial government policy changes.

“It’s almost like the dog that got the car,” said R.J. Johnston, with the University of Calgary’s School of Public Policy, in a panel discussion at an Alberta Securities Commission conference last month.

“We got what we wanted as an industry. Now the pressure’s on to invest.”

Ottawa has made several moves aimed at boosting output, including reversing a host of Trudeau-era environmental policies and making more investments eligible for immediate tax deductions, permanently. Alberta on Friday announced a new royalty program to spur development. And both governments are shouldering the bulk of the investment in the proposed Pacific Link pipeline to southern B.C., enabling greater exports to Asia.

But experts say any big-ticket upstream investments that might result will have to compete for capital with the healthy dividend growth and share buybacks oilpatch investors have come to expect in recent years, and avoid the staggering cost overruns of the past.

“Expectations that the industry will follow through with massive investment are maybe a little unrealistic,” Johnston said. “It doesn’t fully account for how industry’s positioned with its shareholders and capital providers.”

Michael Berger, a senior analyst at Enverus, said in an interview that producers have been prioritizing paying down debt and boosting shareholder returns, and he expects that to continue in the coming years.

“The large oilsands operators have multi-decade inventory profiles. It’ll be a balancing act in terms of adequate shareholder distributions and prudent capital allocation decisions for growth barrels.”

Chris Seasons, a partner at ARC Financial who used to lead Devon Canada, told the ASC conference it was a “go…

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