Varcoe: New CAPP President Takes the Helm During Complicated Energy Conversation

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Oil and natural gas prices are soaring this year, concerns about global energy security are rising, and Ottawa is developing a new federal emissions cap for the oil zone.

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At the same time, oil production in the province has reached record levels, corporate profits are rising, while taxes and royalties directed at various levels of government are set to reach staggering levels.

These are challenging times for the country’s oil and gas industry, and for the new head of the Canadian Association of Petroleum Producers.

Lisa Baiton, who took over the helm of the organization that represents the country’s largest oil producers in May, previously spent more than a decade working at the Canada Pension Plan Investment Board, as head of global public affairs.

She grew up in Swift Current, where her parents ran an oilfield services company, and prior to joining CPPIB, she worked as Vice President of Environics Communications.

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“He grew up in a household that understood the importance of the industry… right down to the local level,” says former Saskatchewan Premier Brad Wall, who went to school with Baiton in Swift Current and whose families have known each other for decades. .

“If you think about his experience in the private sector, which is considerable, and his understanding of politics … it’s a great combination.”

CAPP’s new executive director sat down this week with Herald business columnist Chris Varcoe to discuss some of the key issues facing the industry, from capping emissions from the oilfield to environmental, social and government.

Here is an abridged transcript of their conversation, edited for space and clarity.

Q: You have been on the job for three months. What are the priorities for CAPP, now that you understand what is at the forefront of the organization?

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Baiton: Well, I think it really all comes down to the fact that we’re in a new era. If you look at geopolitics over the last few months, or even years if you take into account the pandemic and rising commodity prices… the industry is really well positioned to be a provider of critical solutions to critical problems facing consumers. governments globally, whether it’s security or energy supply, or how to deal with climate change.

Q: In the next 12-24 months, what are the three things CAPP needs to accomplish?

A: The first is (to be) that kind of constructive, solution-oriented partner on critical issues like energy security and supply, affordability, and climate change.

The second leg of the stool is to continue to engage with our energetic citizens… and do a better job of showing all the really great innovation and technology that’s being used and invested in to reduce GHG emissions…

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Q: So there are two.

A: (The third) is that we need to spend a little more time outside of our echo chamber and engage with a broader set of stakeholders.

We’re at this unique time where, because of all the issues I mentioned, people are open to taking another look at our industry. They’re seeing how important the Canadian energy industry is and I also think they’ve really started to connect the dots of where (you get) your energy and how it’s produced are just as important.

Q: You’ve talked about being constructive and solution-oriented. Has it been a problem with CAPP that it has been too contradictory with the government, particularly with the federal government?

A: Well, listen, I’ll start my remarks by saying that I have a lot of empathy for my predecessor, who presided over the association for probably the worst seven years the industry has ever faced.

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That said, I would just say that the approach one might take when facing an existential threat is really different than when commodity prices are high.

So I would just say, look, we’re in a new era and a lot has happened… the global market fundamentals have changed dramatically and we’re seeing those things manifest in real time, for example with our allies in the UK . and Europe

Q: You have raised concerns about the federal cap on emissions in the industry and its impact on production. What is your underlying concern?

A: We’re still digging into the details… but our initial assessment is that maybe this isn’t the right time. On the one hand, we are being asked to increase production, to support our allies, in building energy security.

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And at the same time, we’re looking at potential proposals that could run counter to the progress that Canada has been making to achieve GHG emission reductions and meet climate goals…

We are concerned that it is not an economy-wide approach and that it highlights our industry.

Q: So is this the right time?

A: I would say no, it is not the right time. Now more than ever, Canada really needs to work to make sure we have the right environment to attract investment so that we can be the preferred supplier of the world’s most responsibly produced oil and gas when our allies look to us. for help

Q: The federal government is going to look and say, well, the industry just posted $12.5 billion in profit from the top five oil sands producers in the last quarter. If not now when?

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A: People forget how tough the last seven years were and our industry is just emerging now and rebuilding its balance sheets now. And then the other thing I would say about high commodity prices is that… it’s a benefit to all Canadians in terms of our tax and royalty frameworks.

Q: S&P Global Commodity Insights recently released a report showing that the oil sands industry will grow to approximately 500,000 barrels per day (of additional production) by the end of 2030. Where do you see production growth? Will the sector grow in the future?

A: Well, I expect production to grow and I think it really comes down to a lot of the things that we’re talking about here, which is that Canada has a real shot at competing…

Canada, east and west, really needs to pay attention to investment and competitiveness, in general. If you look at US LNG, for example, a few years ago the US was basically doing zero and now it’s the world leader in seven years. Canada could get hold of that

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Q: We saw the Canadian Pipeline Energy Association fall apart about six months ago. Many large oil producers are also members of the Canadian Association of Explorers and Producers…and now, we have the new organization Pathways Alliance (of six major oil sands producers working together to reach net zero emissions by 2050). What would you tell people? about the future of CAPP?

A: I am very optimistic about the future of CAPP. I think there is great value in what we provide to our members, in terms of the voice that we provide to the industry, to the entire upstream industry. And I think there is room for all of our voices at the table.

Q: Do you expect tar sands members to remain in CAPP?

A: I do.

Q: What is the message you hope to convey regarding investing in the oil and gas sector and ESG?

A: Well, you know, with my old hat on, if I was sitting on CPPIB, it always comes down to investor certainty, right? And there’s a lot that goes into that. It could be a geopolitical risk, regulatory certainty is enormous…

We need to talk to a broader set of stakeholders and that includes making sure that the financial industry knows all the really good things that the industry is doing … to reduce GHG emissions and be part of the solution.