U.S. invites new oil and gas investment while Canada lags behind
Source: Fraser Institute
Last week, America’s oil and gas sector received good news on the investment front. Pembina Pipeline Corp’s CEO Mick Dilger said that the next “game-changing” project could be in the United States, not Canada.
He’s referring to the revival of the US$10 billion Jordan Cove Energy Project, a liquefied natural gas (LNG) export terminal that will transport Western Canadian gas to Asia. Since Canadian pipeline and LNG projects are tied up in regulatory and political limbo, it’s not surprising to see investment dollars moving south of the border to take advantage of the favourable business environment.
The US$10 billion influx of investment in the U.S. comes at a time when LNG companies are pulling the plug on Canadian projects. For example, Petronas cancelled its $36 billion Pacific NorthWest LNG project in 2017, citing an “extremely challenging environment.” The company spent $400 million on provincial and federal regulatory processes before making its decision to cancel the B.C.-based project. While Canada experiences project cancellations, our American neighbours are seeing LNG terminals come on-line, with the ancillary benefits of jobs and government revenue.
The U.S. advantage over Canada was also reflected in the Fraser Institute’s latest Global Petroleum Survey, which allows investors to evaluate policies that govern the oil and gas industry (royalties and taxes, duplicative regulations, etc.) and make jurisdictions attractive—or unattractive—to investment.